Having weathered the events of the past few years, business owners are still facing a multitude of challenges, from inflationary pressure and skills shortages to increased governance requirements. Recent research* found that more than half of entrepreneurs surveyed would consider selling their business in the next 12 months.
Getting “Deal Ready”: Preparation for Business Sale
If you are a business owner with an ambition to sell your business or attract an investor, the best investment you can make is to ensure you are prepared for what’s ahead – practically and emotionally.
It starts with a data room, gathering all the information a buyer could need to ascertain their interest and arrive at an offer. A broker or corporate finance adviser can help with this process, bringing both expertise and experience, especially if this is your first transaction.
This will include your latest statutory and management accounts to date, contracts with suppliers and customers, regulatory reports, property-related contracts, HR files and tax records, and information on any money the business has borrowed. However, consider what else tells your company’s story and any other information that will stand you in good stead.
Finding the Right Fit Investor or Buyer: Beyond Numbers
It’s easy to get bogged down in spreadsheets and numbers when talking about attracting a buyer, but building, running, and selling a business is a very personal journey for owner-managers. Most people want to factor in much more than finding the buyer that will write the biggest cheque.
Think about what’s important for you and the legacy of your business. You may want to continue to be involved in running the business or at least ensure that your team and customers will be well looked after if you are planning to exit. This is why cultural fit is key. Some of this concerns finding a buyer with the same values as you and your business, which you can ascertain through meetings and reference checks throughout the process. It may also be important to you to find an acquirer with deep sector expertise and a strong track record of continuing to scale businesses just like yours, or you may feel that a trade sale to a larger competitor will be the most seamless transition for customers and allow your employees to continue to build their careers.
Exploring Investment Strategies: The Tristone Approach
A significant range of options and innovations are constantly coming to market, so it’s truly about finding your match. For example, at Tristone, we are long-term investors, providing permanent capital and delivering sustainable commercial success alongside positive social impact. Our buy-build-and-hold strategy is based on an articulated proposition to the owners of high-quality businesses, allowing them to typically realise a significant portion of their equity value whilst retaining a minority stake in the company over the medium term to realise further value, enhanced by our strategic management, wider resources, and operational community.
Our decentralised model and long-term investment horizon empower our businesses to focus on what they do best – delivering outstanding products and services to their clients. We believe the best decisions are made locally by those closest to the customer. Furthermore, as we do not manage outside capital, we are completely vested in the financial success of our investments and impact. We can focus on building sustainable profitability and growth that benefits companies, individuals, and society at large.
This approach appeals to a broad range of business owners. Knowing their business is in a portfolio of like-minded companies that share common values led by a corporate parent who will protect their company, brand, people, customers and, ultimately, their professional legacy has often resulted in Tristone being the chosen acquirer over higher financial offers.
Managing Expectations: Navigating Deals in a Challenging Environment
We are all operating in a challenging environment, and while there are still good deals to be done, the backdrop needs to be factored into how quickly, at what price, and possibly how a deal is structured.
Give yourself as much of a runway as possible and start having conversations so you can put a plan in place for managing the deal process and keep sight of the day-to-day of running the business, too. It is still possible to achieve reasonable valuations for quality assets, but listen to the market and your advisers on what you can expect. When it comes to structure, it helps both parties be open-minded about how you can arrive at the best terms for everyone involved.
Reflecting on Long-Term Ambitions: Developing Your Exit Strategy
As we look ahead to another year, it’s the perfect time to reflect on your long-term ambitions and what you want from your business professionally and personally. If you resolve to work towards selling your business or attracting investment, get the foundations in place and start having conversations to develop your exit strategy.
