Always be ready for the transfer
- 2 February 2021
- Posted by: admin
- Category: M&A
Making the decision to transfer your business is an important step. Many decisions to sell a business are made in an unfavourable environment.
We are all familiar with the priorities in the day-to-day management of a company. We often forget to focus part of our efforts on the administrative organisation, to give just one example. But we could also talk about the growth plan, the implementation of procedures, or a clear definition of your company’s marketing positioning.
Continually, and whenever necessary, I insist on the fact that each company must be permanently ready for the sale. All too often I hear that preparing for the sale can take up to three years and this strikes me.
As soon as a candidate acquirer comes forward, the process of transferring a company takes place over a more or less long period of time. During this time, the candidate acquirer will take the time to scan your company.
Taking three years to prepare for the sale of your company means taking the risk of missing the “momentum” of the sale. That is to say, the essential elements for a very good sale are brought together. We could name a candidate buyer who corresponds exactly to the expectations of your company, your staff, your customers, but also the “just in time” with the market and its competitors. These are just a few examples.
The central question, it seems to me, is why shouldn’t and can’t we always be ready for a voluntary or even forced transfer?
Personally, every company must be ready for divestiture at all times. It is therefore more a question of awareness than of real preparation. This awareness will certainly contribute to improving the value of your company, your positioning vis-à-vis your competitors and also increase the maturity of your company.
Even if the subject discussed in this article is complex, I would like to draw your attention to the following main elements:
First of all the implementation of a vision and a strategic deployment of your company.
Whatever its size, every company has a vocation to grow. And it is with this growth objective in mind, through the participation of the various players, that your company will achieve greater organisational stability.
This organisation will also be analysed and interpreted in the context of disposal discussions.
This can only be done with the participation of specialised professionals. Do not hesitate to ask for the assistance of specialists. You will soon see the benefit of your investment.
The depersonalisation and dependency of your organisational structure.
Too often I have seen beautiful family organisations that “catch a cold” when the leader coughs.
This strong dependency, which sometimes prevents your staff from obtaining or maintaining autonomy in decision-making and/or operations, can hinder or even prevent the sound management of your company.
The autonomy of your organisation will be closely watched by potential buyers. This autonomy coupled with the implementation of internal control within your company will give you real advantages in your negotiations with the buyer.
The presentation of your annual accounts.
I invite you to take care of their presentation. The history of your accounts is part of your company’s communication. They reflect your growth strategy, the management of your investments and your rigorous management.
More specifically, it is through the preparation of your annual accounts that you will prepare the valuation of your company. In particular, it is through the valuation of your equity capital that you will contribute to the future value of your company.
You must therefore agree to pay tax to improve the value !
Don’t hesitate here either, to get support from a tax specialist or accountant specialising in business management.
Your annual accounts are your company’s communication media.
Finally, I would like to share with you one of my latest experiences in the context of a company sale assignment.
The conditions of intervention were unfortunate and difficult on a human level. The sole manager of the company had had a car accident with disastrous consequences. His disappearance left his wife totally bereft at the head of a company of more than twenty people. No procedure had been put in place and no provision had been made for the appointment of a second manager. The operation of this fine company was slowed down from one day to the next.
Although the company could operate independently, the manager was in charge of all commercial and marketing relations and had a development plan in his head.
His disappearance had disastrous consequences. Overnight, his wife had to face a position as a company manager when she was not prepared for these responsibilities. We brought in an interim manager who managed this crisis-stricken company under difficult conditions. Beyond purely financial considerations, the value of this company fell with the disappearance of the manager, and we had to reassure customers, suppliers and especially the staff. In the end, we were able to complete the sale in a relatively short period of time but with a reduced valuation by a certain coefficient that could no longer be attributed to the continuity of the business.
I can only advise each manager to set up a business continuity plan within his company. This continuity plan must contain management procedures, management rules, legal and accounting information and the availability of company data. It is a real work in progress that should not be neglected under any circumstances. This continuity plan will be very useful to you in the context of a disposal project.Allow me to have one more thought for this wife and her children. The conditions of my intervention were special and I would like to congratulate her for the way she wanted to be present and ensure the continuity of her husband’s company’s legacy for her employees.
As you can see, constant preparation for the sale is a vast subject and I could have written whole pages more. The idea of these few lines was to make you aware of the mastery of your company and to neglect no detail.
I would be very happy to accompany you in your reflection.