Selling a Company – A Practitioner’s Guide- Mastering the skill of making a successful disposal

Course Overview:

Selling a company to achieve a vendor’s target price is frequently a time-consuming and complex process. In addition to the legal and accounting considerations there are issues of presentation, timing and tactics that are important elements of the campaign to close a successful sale.

The course covers the practical steps that are required to plan, negotiate, and close a successful sale. Valuing the business to be sold and the effective presentation of the commercial attractions of the business are key elements, as are choosing the appropriate advisers and running a competitive auction.

Course Content:

Overview of the Process

• Motives and objectives of the vendor
• Which outcome is preferred
  • Cash only
  • “sale with honour”
  • Management buyout
  • IPO
• Timescale

Preparing the Company for sale

• optimising the operations
  • removing skeletons, resolving related party conflicts
• resolving accounting / audit issues
  • tightening up provisions, write offs, stock obsolescence
• clearing legal points
  • employee issues
  • customer / supplier disputes
• choosing advisers
• tax considerations
  • the vendor’s position
  • company PAYE, corporation tax

Quiz: What are the top ten objective of a vendor

Assessing the value of the business

• traditional metrics
  • net assets
  • comparative ratios
  • DCF
  • Enterprise Value
• Other factors
  • IPR
  • Market share
  • Customer base
  • Niche products
  • Strategic value to a buyer

Exercise: Calculating the value of a business using different metrics

Initiating the Process

• Choosing advisers
  • Investment bank
  • Merger brokers
  • Accountants
  • Other

Exercise: Reviewing the terms of a mandate letter. Attendees are given a draft to edit and criticise

• Agreeing the mandate
  • Fees
    • Retainer, success, no go
    • Exclusions
    • Companies and territories
    • Time limits
    • Indemnities
• Preparing key documents
  • Information memorandum
  • Support material
    • Confidentiality undertakings, product information
  • Due diligence pack
    • Reasons for, use of vital data rooms
• Management preparation
  • Confidentiality
  • Conflicts of interest
  • The “sale team”
  • Presentation material

The Sale Process

• The cost / risk / timescale issues in
  • A trade sale
  • Buyout
  • IPO
• Trade sale approaches
  • Public auction
  • Private auction
  • Bilateral negotiation
• Organising an auction
  • Identifying the purchasers
    • Tiering prospects into probables, possibles, maybe
  • Defining the deadlines
    • The importance of realism
  • Contact and confidentiality
    • Dealing with large company buyers
  • Judging the offers
    • Will a “no price” offer work?
  • Conducting the second stage discussions
    • Company and management visits
  • Preferred bidder and exclusivity
    • How long for exclusivity?

CASE STUDY: Reviewing an information memorandum on a company sale to assess: the value of the business, the most likely buyers

• Sealing the deal
  • Earn-outs
    • Bridging the valuation gap
  • Warranties, disclosure letter
    • Buyer / vendor conflict
  • Time limits, caps
  • Completion accounts
  • Comfort letters
• Alternative outcomes
  • IPO, timescale
  • MBO, management conflicts
  • Post “exit” lock-in
  • Ongoing relationship