Buying, selling, building or retiring – you need a plan!

Headlines:

• If selling - you have to have a plan and prepare preferably five years in advance. If buying - apart from the obvious one of the most important elements is to ensure the culture fit is right.
• Can underestimate the importance of the transitioning of the business whether being bought or sold.
• Financial intermediaries with established businesses have several options open to them as they plan for the future, but without a strategic plan they are less likely to achieve their goals.
• Business plans must reflect the aspirations of the business owners. I.e. what, why, how and when.
• Alternative Strategies: stay as we are – and retire and sell the business in x years’ time.
• There is increasing interest in ‘Succession & Employee Ownership Trusts’ (EOT) as an alternative to sales.

Key issues and challenges:

• Nobody who was looking to sell had any real plan despite most of the room approaching retirement.
• Lack of understanding of the intensity regarding due diligence, the only person in the room who had bought a business did no due diligence at all and bought on the basis that he knew the chap.
• Lack of awareness as to what would make their business attractive to a potential buyer.
• Lack of awareness as to where to find purchases especially for bigger businesses.
• Consider as owners what their life might be like once the business was sold and whether or not they intended to work within the business for a transitioning period.
• All seemed keen that their business would be sold to someone similar to themselves with a similar culture rather than selling out to the highest bidder.
• Generally there seemed to be no understanding of the process regarding the selling of their business nor where they could go to seek advice.
• There was much interest in the recent sale to a trust of employees by another firm not represented at the table.
• Build the business - to a target size typically measured in profitability or funds under management before selling the business.
• Other key dependencies include the ‘Shareholder Agreement’ and the issue of ‘Loan Notes’ repaying the owner(s) for their equity over a period.

Conclusions and solutions:

• It was clear that everybody would need help in order to maximise the price of their business and to sell it.
• There didn’t seem to be anybody interested in buying a business in the room but again if there was they would clearly need help.

Expert: Martyn Laverick - Soprano Consulting, John Chapman - Owen James Group
Facilitator: Brod Whiting - Joynd Up, Roderic Rennison - Rennison Consulting