Exit Programme Planning, Preparation, Marketing & Completion
At some point most business owners of SME sized companies dream of a successful exit and wealth creation event for themselves, their families and quite often a small amount of local staff and external shareholders.
There are no simple routes to exit, but there is a proven model which we have built up over the years at Dropjaw which will help pave the way to that all important transaction.
Planning the Strategy to Exit
To ensure maximisation of shareholder value identifying the optimum timing for exit is the key. By considering individual and company considerations as well as economic conditions, the road map for the sale can be drawn up.
A comprehensive valuation will demonstrate the financial strength of the business and can be extended to identify opportunities to enhance the attractiveness of the business to prospective purchasers.
Statutory and Management information, including Profit and Losses, Balance Sheets and Key Performance Indicator schedules are key documents that need to be reviewed to ensure the company will pass due diligence.
Preparing for Exit
Once the decision has been taken to sell, an internal team of Directors and senior managers needs to be appointed, to ensure the day to day company activities continue. The main document to be created is the Memorandum of Information, which identifies the strengths of the business and presents the opportunity to prospective purchasers.
Your advisers will then research the market and compile a detailed report on prospective purchasers. A final strategy review and confirmation of the planned sale process will be matched to the original objectives. A teaser will need to be created to entice the prospective buyers.
Marketing and Approaches
A coordinated process of direct approaches to prospective purchasers will begin with the teaser. It is important to ensure confidentiality agreements (NDA’s) are prepared and that only approaches to carefully selected investors are made.
Initial Acquirer Responses
Once the interested parties have signed the NDA the IM can be provided, along with any additional ad hoc information and meetings are arranged. Your team hosts meetings with interested parties and manages the release of supplementary information, forecasts and, if required, arrange site visits.
Follow Up and Offer Negotiation
Once meetings have occurred you need to, in a timely manner, continue to follow up and close out specific issues and follow up any post-meeting information requirements.
At this point expressions of interest and indicative offers will be obtained. Consideration and discussion of the benefits and any offer refinements need to be carried out, leading to the acceptance of an offer.
Heads of Terms are then drawn up that detail the headline aspects of the deal and form the bases of the legal documentation. Preparation then needs to be made for the Due Diligence process and the possible requirement of a Data room.
There are many facets to the Due Diligence Process (DD) which can involve Financial, Commercial, Legal and Human Resources. All these processes are designed to ensure your documents and representations give a true and correct view of the business. This process needs to be controlled and monitored to ensure, where appropriate, any obstacles to completion can be identified and overcome.
Leading on from the DD process, legally binding agreements are designed and agreed. These documents ensure that you and the acquirer reach and record an acceptable agreement and detail all the important facts.