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Preparing for sale The best
MEMBER INSIGHT:
The best preparation for a sale is decisions are MEMBER INSIGHT:
PREPARING FOR MBO
a well-run business, with a strong around hiring PREPARING FOR MBO
Tony Ward, Founder, Darent Wax co Ltd
senior team and solid financial the right people Tony Ward, Founder, Darent Wax co Ltd
into the senior
management management I bought another
I bought another
factory and
positions. factory and
You will be in a stronger position to deliberately stayed
deliberately stayed
away from the
negotiate a higher multiple if you have the Alastair Stewart, away from the
mothership for 6
right team, a good track record with the CEO, etc.venues mothership for
months. I established
numbers, clean data, contracts that are all months. I established
the factory, fitted
the factory, fitted
up to date, and a strong, realistic forecast. it out, got it up and
it out, got it up and
running and stayed
running and stayed
Members looking back at their sale away from the main
away from the main
business.
process highlight the need to ensure the business.
management team is bought into your
Everything was exactly the same after 6
exit strategy and motivations are aligned. Everything was exactly the same after 6
months so I realised I had to get someone
Some members have used incentive months so I realised I had to get someone
in to do some leadership and ops stuff.
in to do some leadership and ops stuff.
schemes like EMI and Growth Shares
to incentivize top performing senior After trying two guys who just wanted to
After trying two guys who just wanted to
employees. Others have designed formal change everything and do it their way, I
change everything and do it their way, I
finally got someone in really switched on.
agreements covering minimum price finally got someone in really switched on.
He’s the same age as the younger tier of
expectation and remaining in the business He’s the same age as the younger tier of
people here. I sat him down and told him
following a sale. people here. I sat him down and told him
he wasn’t going to do anything for three
he wasn’t going to do anything for three
months, just watch and learn how the
SUCCESSION PLANNING months, just watch and learn how the
business does things, and at the end of
business does things, and at the end of
Members who have exited recommend that we’ll do a report on what works, what
that we’ll do a report on what works, what
that you plan well in advance to put doesn’t, and what needs to change.
doesn’t, and what needs to change.
succession into place, at least 2 to 3
It was the hardest three months of his life,
years before you plan to sell. To instill It was the hardest three months of his life,
but he did a great report and found it to
confidence, particularly with PE or an Take holidays but he did a great report and found it to
be an incredibly useful experience, and he
IPO, your executive team must have and record your be an incredibly useful experience, and he
was accepted by the whole team. It gave
was accepted by the whole team. It gave
the credibility, skills, and day to day absences. This us something to work with. Then I brought
us something to work with. Then I brought
responsibility for running the business. will show that you the guys in to advise on the MBO. I did a
the guys in to advise on the MBO. I did a
Buyers and their advisors will want to be aren’t instrumental skills analysis on the team, and that was it;
skills analysis on the team, and that was it;
reassured that they have been doing it in running the pretty straightforward from there on in.
pretty straightforward from there on in.
business and
long enough that they will not miss a beat don’t own major
with a transfer of ownership. relationships.
Partners advise a move into a chairman advise bringing them in early to present the
role at least 12 months before you sell. figures in the right way (i.e using accounting
If it’s later than that, buyers may feel it’s treatments to favour a high EBITDA). They
still dependent on you. Look for a trusted can build and maintain your data room, and
and reliable MD or CEO who can not only respond quickly to requests for the right
run the business but impress investors and Some members financial information. During the sale process,
potential acquirers. Define the role around have used a crisis they can help you avoid under-trading and
the skill set and behaviours you want to test, based on a ensure your operational accounts balance
see, not just tasks and competences. scenario that has with forecast numbers.
or could happen,
Some members who have successfully to identify skills A Non-Executive Director (NED) with a
gaps in their
built senior teams by promoting internally senior team and strong reputation can add credibility to your
observe that it could be a newer recruit fill them before business, which will reassure potential buyers.
with the right attitude and skill set. Don’t going to market. Some members have used them to advise
be afraid to elevate and coach someone If it’s your number on the right kind of exit; to find an investor
into a senior leadership position if they are two, ask how they or buyer; and to keep them focused on the
the best fit. would deal with a exit strategy. Members who have seen the
particular scenario greatest value from NEDs recommend that
Some members attribute their successful if you were gone you are clear on what you want from them,
and how they
exits to a finance director (FD) or CFO would manage the check references, and validate them to
with experience of selling a business. They business. ensure they can help you.