5. The structure of every deal is as important as the price. Key questions include: How long must the seller/vendor remain with the company?
How many shares will they sell initially, and will they retain a majority or minority holding? How will the company be valued?
Does the retiring IFA want to exit the business asap, or do they want to stay with the business going forward? Does the vendor want to stay with the new company in a management position or just as a figurehead?
Does the retiring IFA wish to retire at all, or are they seeking professional help to understand their options better?
6. Ensure that any non-disclosure agreement has legal 'teeth'. There will always be bad actors who illicitly share information.
A vendor can be hurt badly if the knowledge of a sale reaches the public domain or gets into the wrong hands; staff and clients can be unsettled, and the firm disrupted.
After all, it is one reason that owners are often reluctant to put their businesses up for sale in the first place.
7. Prepare your shop window. One of the roles of an independent consultant is to create an excellent 'shop window'. It may be that your business requires some 'beautifying' before it is ready for sale.
Like the property 'dressers' who help properties fetch their maximum value, your M&A specialist can be on hand to implement a few judicious touch-ups wherever needed.
8. Make broader improvements wherever possible. Make sure you also leverage the expertise of a good consultant well in advance of a planned sale.
They will assist you in making adjustments that will increase the profitability and, therefore, increase your business's value on an EBITDA (earnings before interest, tax, depreciation and amortisation) basis.
A vendor/seller will always look more professional when using an independent consultant to sell their business. It creates a very positive impression on potential acquirers.
It shows that you are a serious player – rather than someone prone to unwise penny-pinching – which can only make your business look even more attractive.
9. Direct approach from an acquirer. Finally, if an acquirer comes to you directly, do not be tempted to allow them to cut the independent consultant out.
The likely result will be a lower price, a less-than-ideal purchaser and the wrong infrastructure in the future for your clients.
Brian Spence is an independent business consultant
