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***Advertisement: Ascent Partners 29 September 2010***

Tuesday, 28 September 2010
By Print 21 Online Article

Q3 – What’s the usual course of events when preparing a business for sale?

Answer – The first step is to seek an early appraisal of what your business is worth in today’s market.  In the previous few weeks, I’ve provided an outline of how you can calculate this value, and the service we offer in this area. Us aside, it’s highly desirable that this appraisal is done early by an industry experienced person.

If they’ve sold printing business before, that’s great, but even better if they have sold them more recently, as the market has changed dramatically. A lot of the value for more many businesses is the asset value, and a major portion of that is in plant and equipment. So any agent selling a business needs to know these values.

After the appraisal is given, you can develop a plan to maximise the net proceeds of a sale. Be prepared though, as often the value provided in the appraisal is far less than what the proprietor “hopes”, or “needs”, to achieve. We all “hope” for a high value, and that someone will one day bang on the door and pay over the odds for our business. Unfortunately that rarely happens, especially with standard commercial printeries. Proprietors also often tell me they “need” to get $X for the business. Unfortunately, the market realities and the “needs” of the vendor are two different figures. 

So, stage two is to develop a plan. What are the options available to exit the business at the desired date in the future? Here, a good degree of realism, and perhaps impartiality, is needed. If you are struggling now, what are you going to do to turn things around? What is the plant and equipment plan? What business model do you need to adopt as you approach exit? In short, what is the best, most realistic plan to exit in your timeframe with the most equity?

After the plan is developed, it needs to be implemented and monitored.

When it finally comes time to sell, you need to appoint a team to help you. Often this includes a lawyer, accountant and a business agent.

The normal course of events is that a business agent or yourself (if you are acting for yourself), needs to prepare an information memorandum about the business, which would include an asking price. Sometimes, for small businesses, by law you may need to have your accountant prepare a company statement (In Victoria this is known as a section 523 statement).

The agent also prepares a plan to market the business. Frequently they have a list of known buyers, and may market the business to them first (as Ascent Partners frequently do), before marketing it to the wider trade community in mediums such as Print21 Onine.

Once the agent receives a response they usually require a confidentiality agreement to be completed. They also should qualify the buyer – basically are the READY, WILLING and ABLE to make a purchase? But also about the type of purchase they wish to make – do they just want the client base, or the complete business? Do the need the premises? The aim here is for the agent to initially focus on the purchasers who can supply the best deal for the vendor

Once qualified, confidentiality agreement signed, information memorandum supplied, and there is still interest, there is usually a need for the meet and greet.

An offer may be made, or terms discussed, and the negotiation ensues. Finally an agreement is reached, any contracts are made up and deposits paid. Due diligence follows. This is where the purchaser checks and verifies the business information that has been provided. This can included, but is not limited to, checking details on staff, financials, plant and equipment ownership and valuations, property lease, clients and suppliers, insurance, OH&S, transferability of rentals, trading names and company checks.   

A transaction then occurs, where ownership is transferred.

There are a lot of different variations of this typical sequence, and there is a lot of detail and work that goes into making a sale happen. In our experience of assisting over 20 printing companies sell their businesses, no two sales are the same. What is common however is the emotional attachment that vendors have with their business. An experienced sales agent can greatly assist in providing knowledge and advice as well as assisting in taking out some of the emotion in the sales process.

Sales can take some time, but in today’s market, as with any market, as long as you are in touch with the market realities, the price and the terms are realistic, and the sale process is conducted professionally, the business will sell relatively quickly. 

Ascent Partners provides industry-based market appraisals, assists in developing and implementing exit plans, and finally acts as sales agent to market and sell printing businesses throughout Australia

Contact Richard Rasmussen today for a confidential discussion about your needs on 0402 021 101

 

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