TCII :: Management Consultants
Building Profitable Business
The final deal value exceeded the owner’s expectation by 58 per cent with 75% paid on completion and the client was able to leave for Australia two months after completion. The time taken from our engagement to completion was 5½ months.
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Graphic design, branding and communications agency.
Selling up and extracting the full value of your business
Our client, the owner of a graphic design, branding and communications agency, had decided to sell his business and move to Australia with his family. Applications for visas were already well in progress when the client approached us, which set a time limit for him to move to Australia. Being a relatively small business based on personal relationships, much of the goodwill of the business resided with the owner. He therefore understood that he required professional help to enable him to achieve his exit in a short time frame.
Our challenge
Our key tasks were to value the business, implement a marketing strategy that demonstrated this value to prospective buyers and find him a buyer within six months.
What we did
We first analysed the current business situation and prepared a valuation report that looked at the various methods to calculate the value of the business. We compared these to other similar companies for sale and to the owner’s expectations. We advised on the type of offer and deal structure that the client should expect and gave a number of quickly implementable actions to enhance the desirability of the business.
We then prepared an extensive Sales Memorandum which highlighted all the selling points of the business, namely the profit that could be achieved by a new owner (i.e. adjusted net profit), sales forecasts based on sound assumptions and evidence, and the recurring revenue derived from a diverse client base including government agencies. We also looked at how the client relationships and ongoing business could be practically transferred from the seller to the buyer post completion.
Clarity of information is key to driving a prospective buyer to make a decision. If the description of what is being bought is not clear, and answers to buyers’ questions are not forthcoming quickly, the decision will be negative. Working with the owner, we put together a clearly presented package that could be provided to buyers as soon as they asked the questions.
We then started our marketing campaign of direct approaches to companies identified as strategic buyers, consultation with our network of advisers and database of buyers, and advertising. Having qualified the buyers regarding their intentions, means of funding and acquisition search criteria, we arranged and attended meetings with the client. Confidentiality Agreements were signed by all buyers prior to providing the identity of the company and any confidential information.
Over the course of three months we presented the business to over 20 interested parties and a date was set for offers to be received. The most promising buyer was selected and it was announced that their letter of intent had been accepted.
The outcome
The final deal value exceeded the owner’s expectation by 58 per cent with 75% paid on completion and the client was able to leave for Australia two months after completion. The time taken from our engagement to completion was 5½ months.
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