October 1, 2015

FAQ

Emirates Towers skyline

Frequently asked questions

 

Why do I need an advisor?

Your priority is to run your business as good and as hard as you can. Everything else is a distraction. When you start trying to think about how to sell your business, or how to make an acquisition, you are taking your eyes off the ball. Your company may become less attractive while you are busy learning something new rather than running your business.

We have dedicated our business to buying and selling companies. We have acquired a specialized skill set. We are very effective at profiling your company with a view towards a sale. We have been selling many companies. We are experienced at researching who might be an interested buyer or investor into yours. As outsiders, we have the attitude of a buyer. As professionals we have an eye for structure, valuation and the attractiveness of a business as an investment opportunity. This is not about knowing everything. It is about getting properly and comprehensively prepared and then approaching prospects and opportunities in a professional way.

Our intermediation enables you to think freely and discuss extensively without giving anything away. If you want to make an aggressive argument you can make them through us without exposing yourself. We will be professional moderators in negotiations. We will guide the decision making process, coming up with Fresh Perspectives to strengthen your sales arguments.

In short, we provide time that you should not spend. We add to the skill set of your team. We have different and complementary networks that will ensure finding suitable investors. And we can be your diplomatic go-between to find out and discuss things on your behalf.

 

What types of advisors are required to do a transaction?

A good transaction team will include: an accountant, an attorney and somebody like us as a transaction advisor. Even large companies with many resources hire investment bankers or transaction advisors to do these deals. We know how to work effectively with your company’s accounting and legal representatives. We insure the transaction is properly researched and documented. We make sure it is structured to address transactional, corporate governance and tax concerns.

 

I know my business better than anyone else. Why can’t I sell my company myself?

The fact that you know your business better than anyone else is exactly the reason why you should NOT try to sell it yourself. You know far too many details. You are emotionally too committed to make the perfect investment pitch. You know why your business is a good business. Somebody you want to sell it to will need to be convinced that it is a good investment. A good investment is not the same as a good business. Perfectly good businesses have been ruined by having gotten acquired as a bad investment.

Selling a company is a complex and time-consuming process. Any time you have to spend working on selling the company is time you can’t spend on running the company, keeping it healthy and in the best position for a sale. Even the largest companies who have legal and accounting staffs engage experts in mergers and acquisitions when it comes time to buy or sell because they recognize that managing a selling process takes very specialized skills that are developed through experience. It’s just plain difficult to negotiate on your own behalf, especially when you may have to continue, on some level, a working relationship with the buyer after the sale.

 

What do those services cost?

We charge a Commitment Fee and a Closing Fee. The Commitment Fee can be staged over several months of our engagement and serves to cover our costs. The Closing Fee remunerates us for the successful closing of a transaction and consists of a percentage of the total transaction value. You don’t pay it until you are closing the deal.

We will not start work on a project without having agreed on a Commitment Fee. Also, it will not be effective for you to hire someone who doesn’t charge a commitment fee as they will have no incentive to look for the best deal for you. They will try to do just any deal to get to the closing phase. While the better part of our remuneration is in the Closing Fee, we will be fully motivated to work towards reaching the best solution for you as we won’t have to worry about covering our basics.

Pure success fee or commission remuneration works well with relatively standardized goods in markets with good liquidity. The amount of research about a house, a car or, indeed, a commodity is limited, the prices are all over the newspapers and the conveyance of the title to a house is the bread-and-butter business of every local lawyer. Each company, however, is unique and any transaction is one of very few. Also, buying your company involves a large amount of money (not only for the purchase price but also for loans to be rolled over and working capital that needs to be provided) and it will be a long-term commitment. Hence, preparation, planning and execution are much more important when trying to sell or buy a company than anywhere else.

The fact is that you will get a better deal with a competent advisor by your side. Besides, the whole process will add value in terms of improved business planning, corporate governance, financial reporting and strategic positioning. You will need all the advice and assistance you can get. We will make it worth your while.

 

Can’t I save money by doing it myself?

The value of an advisor brings may sometimes be difficult to evaluate. In a sales transaction or an acquisition it’s relatively straightforward. We bring more value than our fee, generally in the form of a higher selling price or better acquisition terms. And there are other ways we add value. We save business owners from having to deal with many details and distractions they face when they try doing it alone. Our added value in terms of internal improvements to business planning and documentation, and the enhancement of the your company’s reputation through our professional involvement, will be significant.

 

How long is the typical transaction process?

From the first meeting to the final closing it will take anywhere between six and twelve months. The preparation for transactions that involve listed companies sometimes starts years in advance. If someone tells you they can do it in a few weeks then they are not aware of the amount of work that goes into it. Without good preparation you will spend a lot of time waiting for answers from prospects, clients, regulators or sometimes even your own board. If you click on the attached Action Plan for M&A sell-side advisory we show you a list of items and a time line of activities you will typically have to go through to prepare, plan and execute a transaction.

 

What’s my business worth?

Determining a company’s valuation is a complex process. No one can give you a legitimate number without doing significant research and analysis. We go through a thorough process to analyze the numbers. We will work to understand your company’s operations, consider revenue trends and evaluate market activity. In short, we learn your business inside out so that the number we deliver to you is a legitimate and realistic valuation.

 

Is it the right time to sell my business?

There are a number of questions you can ask yourself to help you determine if now is the right time: Is the market favorable to selling my business now? Is my business in a strong position with positive trends, a reliable stream of revenue and/or new revenue stream opportunities? Am I personally ready to: a) do the work of a transaction while still running the business, b) look at my business through the eyes of a potential advisor or buyer, and c) actually part with the business? These are just some of the factors to consider when selling a business. However, companies rarely meet the ideal profile of “ready to sell” and yet, they sell. We can help you evaluate if the time is right for you to embark on a sale or if by making a few changes to your business you can reap larger rewards.

 

What about confidentiality?

All prospective buyers sign a Nondisclosure Agreement (NDA) with us before we communicate any specifics with them or allow them to see any documentation other than a no-name summary. Also, we do not communicate with anyone in your company without your specific approval. Discretion is as critical to us as it is to you. Safeguarding your proprietary information is a fundamental part of doing business for us.

 

My employees are important. How is the transaction handled so they stay motivated?

We will not reveal anything regarding your sales transaction to anyone else in your company unless specifically instructed by you to do so. At the same time, we will work with you to develop a strategy for communicating the company’s sale to your employees and a strategy for protecting the interests of your company’s employees after a sale. Addressing the motivation of employees is critically important for the success of the sales transaction. If you don’t keep your employees motivated the buyer may find himself with a company without staff.

 

How do I transition my business once I sell it?

The transition period can be as short as a few months or as long as several years, depending on the needs of both buyer and seller. We listen to our client’s desires and goals and then work that into the fabric of the transaction. The key to a successful transition is to leave a successful business to the buyers. Sometimes this means the seller remains with the company in a different capacity – perhaps as a manager or advisor – for a period of time.

 

Everyone talks about “strategic partnerships.” What does that mean?

Sometimes growing your business requires outside resources. This could be an investor who brings new capital to your business, a foreign distribution partner or maybe a commercial partner with the resources to complete the development and launch of your product. All of these scenarios, and many others, require preparation, planning and a well-run process to find this partner. We lead and manage all of these types of processes.

 

I don’t feel ready to make a change quite yet. When should I start working on a transition?

Now!

The best time to begin working on a sales strategy is well before you actually want to sell. We suggest that you start at least one to two years in advance. We frequently do assessment projects where we look at all facets of the business and compare that against what buyers are looking for in the market. We then work with you to figure out how to maximize the value of your business, providing a road map of sorts. Preparation is key to maximizing value.

 

My business is still relatively small. Will you still work with me?

Usually, if a transaction amount would be below the equivalent of USD 10mio it will be difficult to justify hiring an advisor. However, we have worked on small transactions in the past and become trusted advisors of the people involved. Subsequent advisory was larger and more lucrative and it paid to stay and advise the right people. What is really important for us is to understand your objectives and your motivation. Together, we will then continue the discussion to find a win-win solution.