Daniel Domberger, Partner at Livingstone London, is quoted extensively in The Telegraph’s recent feature on selling your business.
“However,” says Daniel Domberger, a Partner at mergers and acquisitions specialist Livingstone, “if you are selling to retire, the last thing you want is to be locked into working there after the sale.”
Preparation is key, he added, and the detailed planning needs to start early. “Give yourself a year,” he says, “at the very least, three months.” That’s true whether it’s a £200m turnover company or £2m one.
Seek the services of a good adviser. Mr Domberger says: “You have to get the information ready. Make sure suppliers and contractors will remain with the new owner, as some have clauses that allow a supplier to stop if ownership changes. That will reduce the value of your business.”< On Valuation:
Deal structures become more important when there is a gap between the seller and acquirers’ perceptions of the value.
Mechanisms such as earn-outs can be used to bridge the gap by reassuring an acquirer that it won’t pay for value that isn’t delivered, while reassuring a seller that they are not leaving value behind.
“Negotiating these can be tricky because they involve the allocation of risk, and an experienced adviser can make a huge difference here,” says Daniel Domberger, Partner at Livingstone Partners.
The competitiveness of the process, the prevailing market conditions, and the strategic need of the buyer will then influence how far beyond this formal or purely financial valuation an acquirer may be willing to stretch. This is where a good adviser can maximise the likelihood and impact of these factors on the ultimate valuation.