As a successful business owner, you have risked your personal capital, committed to years of hard work making numerous personal sacrifices and been on an emotional rollercoaster, enjoying the ups and suffering the downs, of owning your own business. You have now decided to sell and reap your just rewards.
In maximising value, it is of course important to appoint advisors who can identify buyers motivated to pay a significant “strategic premium” for your business and to run a competitive sales process. However, there are a number of features of a business and the market that it operates in that will ultimately correlate closely to the value that you will achieve.
Profitability is off course important but it’s not just about the numbers. There are profitable businesses that will not attract high valuations because of weaknesses in their business model but equally there are unprofitable businesses that will be highly desirable with for example intellectual property or “know-how” that is yet to be fully exploited commercially.
So what are the ideal features of a business for a successful sale?
Your Company
Track record of profitability (it’s not just about this year’s profitability but consistent profitability and demonstrating how resilient the business has been in a downturn);
Size, i.e have you achieved critical mass and will you ‘turn the dial’ for an acquirer;
Well invested;
High proportion of recurring or repeat revenue to demonstrate the visibility/robustness of your sales forecasts;
Wide and diversified customer base – ideally you do not want your largest customers to represent a percentage of your sales which is larger than your recent sales growth, i.e if you are growing at 20% per annum and you lose your largest customer who accounts for 10% of your sales, the business does not go backwards;
Scalable with good growth prospects; and
Cash generative to service financing structure.
Your Management Team
Lack of dependency on you the vendor with clear succession planning; and
Alignment of interests of your management team, i.e will they support a change of ownership and commit to the business going forward (indeed could there by a management buyout opportunity).
The Market it Operates in
High barriers to entry;
Demonstrable growth;
Attractive market segment with few major risks including regulatory, legal and technical; and
High levels of M&A activity including consolidation of the market (i.e could your business be a platform acquisition to make further acquisitions).
Some of the above features are inherent to your business and cannot be changed but some can be fixed over time and, the extent to which you can influence the above factors, should ultimately drive your decision when to take your business to market.
At HMT we have been selling businesses in the Thames Valley for over 25 years both to UK and overseas buyers collaborating with an extensive international network of independent corporate finance specialists. Therefore, if you are thinking of selling your business and want some expert advice, contact us on 01491 579740.
As a successful business owner, you have risked your personal capital, committed to years of hard work making numerous personal sacrifices and been on an emotional rollercoaster, enjoying the ups and suffering the downs, of owning your own business. You have now decided to sell and reap your just rewards.
In maximising value, it is of course important to appoint advisors who can identify buyers motivated to pay a significant “strategic premium” for your business and to run a competitive sales process. However, there are a number of features of a business and the market that it operates in that will ultimately correlate closely to the value that you will achieve.
Profitability is off course important but it’s not just about the numbers. There are profitable businesses that will not attract high valuations because of weaknesses in their business model but equally there are unprofitable businesses that will be highly desirable with for example intellectual property or “know-how” that is yet to be fully exploited commercially.
So what are the ideal features of a business for a successful sale?
Your Company
Track record of profitability (it’s not just about this year’s profitability but consistent profitability and demonstrating how resilient the business has been in a downturn);
Size, i.e have you achieved critical mass and will you ‘turn the dial’ for an acquirer;
Well invested;
High proportion of recurring or repeat revenue to demonstrate the visibility/robustness of your sales forecasts;
Wide and diversified customer base – ideally you do not want your largest customers to represent a percentage of your sales which is larger than your recent sales growth, i.e if you are growing at 20% per annum and you lose your largest customer who accounts for 10% of your sales, the business does not go backwards;
Scalable with good growth prospects; and
Cash generative to service financing structure.
Your Management Team
Lack of dependency on you the vendor with clear succession planning; and
Alignment of interests of your management team, i.e will they support a change of ownership and commit to the business going forward (indeed could there by a management buyout opportunity).
The Market it Operates in
High barriers to entry;
Demonstrable growth;
Attractive market segment with few major risks including regulatory, legal and technical; and
High levels of M&A activity including consolidation of the market (i.e could your business be a platform acquisition to make further acquisitions).
Some of the above features are inherent to your business and cannot be changed but some can be fixed over time and, the extent to which you can influence the above factors, should ultimately drive your decision when to take your business to market.
At HMT we have been selling businesses in the Thames Valley for over 25 years both to UK and overseas buyers collaborating with an extensive international network of independent corporate finance specialists. Therefore, if you are thinking of selling your business and want some expert advice, contact us on 01491 579740.
The Business Magazine has announced the finalists for the Thames Valley Deals Awards 2018. HMT is delighted to be nominated in four categories including both the Corporate Finance and Due Diligence Teams of the Year and in the Corporate Finance Advisor and Young Advisor of the Year categories. Four deals we advised on – Indigo Telecom, Rowan, Acturis and Knowledgemotion have been shortlisted as Deals of the Year.
This year’s winners of each category will be announced at the Gala Awards Night on April 19th at the Royal Berkshire Conference Centre in Reading.
In 2018, HMT is proud to have been nominated for both the Corporate Finance Team of the Year and the Due Diligence Team of the Year awards, illustrating our position as the leading transactional team in the Thames Valley.
In addition, Partner Andrew Thomson is one of the five finalists for the Corporate Finance Advisor of the Year and Associate Director Adrian Howells has been shortlisted for Young Advisor of the Year.
These nominations reinforce our position as the leading Corporate Finance advisor in the Thames Valley and across the South.
Congratulations!
HMT also would like to congratulate our clients on their nominations:
Connection Capital, LDC, BGF, Maven and NVM who are shortlisted for Private Equity Firm of the Year, each of whom we have advised on at least one deal completed in the past 12 months; and
HSBC, Santander, RBS, Pitmans and Gateley who we have also worked with in 2017 for their nominations in their respective categories.
In the last 12 months, we consolidated our position as the leading transactional team in the Thames Valley, advising on over 30 deals with an aggregate value of over £280 million.
We thank all our clients for their support and nominations, and look forward to continuing to deliver market leading transactions throughout 2018.
The Business Magazine has announced the finalists for the Thames Valley Deals Awards 2018. HMT is delighted to be nominated in four categories including both the Corporate Finance and Due Diligence Teams of the Year and in the Corporate Finance Advisor and Young Advisor of the Year categories. Four deals we advised on – Indigo Telecom, Rowan, Acturis and Knowledgemotion have been shortlisted as Deals of the Year.
This year’s winners of each category will be announced at the Gala Awards Night on April 19th at the Royal Berkshire Conference Centre in Reading.
In 2018, HMT is proud to have been nominated for both the Corporate Finance Team of the Year and the Due Diligence Team of the Year awards, illustrating our position as the leading transactional team in the Thames Valley.
In addition, Partner Andrew Thomson is one of the five finalists for the Corporate Finance Advisor of the Year and Associate Director Adrian Howells has been shortlisted for Young Advisor of the Year.
These nominations reinforce our position as the leading Corporate Finance advisor in the Thames Valley and across the South.
Congratulations!
HMT also would like to congratulate our clients on their nominations:
Connection Capital, LDC, BGF, Maven and NVM who are shortlisted for Private Equity Firm of the Year, each of whom we have advised on at least one deal completed in the past 12 months; and
HSBC, Santander, RBS, Pitmans and Gateley who we have also worked with in 2017 for their nominations in their respective categories.
In the last 12 months, we consolidated our position as the leading transactional team in the Thames Valley, advising on over 30 deals with an aggregate value of over £280 million.
We thank all our clients for their support and nominations, and look forward to continuing to deliver market leading transactions throughout 2018.
