Camino Media and Crowe UK recently held a 'Mergers & Acquisition' event in conjunction with Bird & Bird, aimed at businesses within the Media & Tech sectors. With a selection of industry advisors and business leaders who have managed a sale, the morning was aimed at providing solid practical advice for those looking to buy or sell a business.
In case you weren’t available on the day, here are our top takeaways from the event.
When selling your businesses, the overriding goal is to receive the best price possible. How are you going to achieve this? Get your house in order! Make your business be the most attractive proposition for a buyer it could possibly be. This means maximising earnings, tidy the P&L and balance sheet, identify excess assets for extraction and prepare a quality MI.
Put yourself in the buyer’s shoes for a minute, what is the main goal when looking to buy a business? It is to make a return on your investment. With that in mind make it clear how a buyer can make their return, create a clear, strategic growth plan which is ambitious but achievable. Leave something on the table for them!
Finally, ensure all relationships are formalised, whether that is employee documentation, funding or statutory records.
In short, get your house in order.
There is no set formula. There are numerous variants in deciphering the true value of your business, ranging from the market you operate to the current political climate. It’s human nature to feel your business is worth 15x your EBITDA because it is yours, but you need to try and remain as objective as possible and not pluck a random number out of the air.
Know what is important in your business and where the value truly lays, is it in the IP & technology? Is it the people? Maybe the share capital? Wherever it lays, secure it.
It may massage your ego knowing your business cannot thrive in your absence, but this does not make your business an attractive proposition for a potential buyer. Create a succession plan for when you leave the business by building an effective management team and ensure the key players within your business are sufficiently incentivised.
Take the advice of M&A experts. Selling your business will inevitably be one of the important decisions of your life. The advice is not cheap, but the long-term value they add will far outweigh the initial costs. They can provide advice on the current market and M&A activity, what funding is available, whether there is an overseas appetite or even advising on your valuation. Having these experts on your side will help you make the most informed decision possible when selling your business.
Sales are inherently lengthy and time-consuming processes. Make sure you do not get distracted from running your agency and do not underestimate the time and energy required for a successful sale.
It is inevitable the buyer will look to get the most for their money. Do not be bullied or compromise on your price.
When dealing with international buyers, or even local buyers, never underestimate the differences in culture. This doesn’t only apply to differences in international culture, but the different cultures within businesses from the same country. All businesses have their nuances and you will need to be aware of and appreciative of this throughout the process. Remaining polite and well-humoured should see you through any interesting cultural differences.
When deciding which business to try and acquire there are a number of factors to take into consideration. Everything needs to fall into place to successfully purchase a business, so take into consideration; is there a willingness to sell from the other party? Do they fit with your strategic vision? Do you have the necessary funding? Do you have the capacity to integrate?
Make sure you know the business you’re looking to purchase inside and out. Where is the value in the business you’re looking to buy? Is it in their IP? Their staff? Their share capital?
Another factor to take into consideration is how are you protecting yourself? After all, acquiring a business is a huge decision, have you considered what remedial action you may need to take? How will you ensure key members of staff are not only retained but also incentivised?
Before you get too far into the process, make sure you know what your deal-breakers are. Having clarity on this point from the outset will help keep any potential merger or acquisition on track and within your capacity.
It is inevitable after months, potentially even years of arduous work, you are relieved to get the deal over the line. But, this is where the next set of challenges begin.
Integrating a new business into your group is not an easy process for either party and safeguarding the success of both businesses is the priority. With this in mind, how are you communicating with the group? Listen to what the employees have to say to keep them onboard and all working towards a clear goal. It can be helpful to revisit your original due diligence to keep a view of the bigger picture.
If you would be interested in attending or getting involved in our next conference, please contact Natasha on firstname.lastname@example.org (there's usually free breakfast).
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Click on the link below to see an overview of the event and speakers: https://www.caminopartners.co.uk/blog/2018/05/press-release-going-for-growth-mergers-and-acquisitions-conference-may-2018