Do I need to appoint advisers?
There is no legal requirement to appoint any professional advisers in connection with a sale of your business. However to get the best outcome for you personally it is wise to consider appointing experienced and professional advisers.
If you have not identified a potential buyer for your business, a good adviser should be able to undertake wide reaching buyer research. A fresh perspective from someone not closely associated with your sector will almost certainly uncover buyers you will not have considered, particularly overseas buyers. A good corporate finance adviser will be able to produce a short list of well-funded prospective buyers who are likely to have a strategic interest in your business.
A trade buyer is likely to be using their own corporate finance and legal advisers and not to have your own advisers would put you at a distinct disadvantage in negotiations.
Good advisers will also take much of the burden associated with selling your company off your shoulders. You will still need to be running the business on a day to day basis up until the point of legal completion, and your ability to do this effectively could be severely constrained if you are also trying to manage the sale process at the same time.
What should I look for in an adviser?
The process of selling a business can be intense and sometimes stressful. A good corporate finance adviser will shoulder much of the burden associated with the sale process, right up to the date of legal completion to allow you to keep your eye on the ball and continue running the business.
Ultimately you need to be comfortable working with the team you appoint. Are you confident in their ability to handle your sale? Do you feel you can talk openly to them?
Do not hesitate to ask for several meetings before appointing an adviser, to be certain you will be able to work effectively with them.
Ask for references from past clients and from other professionals they work alongside on transactions.
I’ve already got an accountant, do I need another adviser?
Most good accountancy firms have some experience of advising on company sales and will understand the process, but only the larger firms tend to have dedicated staff working on transactions.
Most accountancy firms do not subscribe to the expensive databases which are key to identifying the best prospective buyers for your business.
Your accountant will still be heavily involved in the process of selling your business and will almost certainly be required to assist in the preparation of completion accounts, in giving you tax advice on the transaction and on-going personal tax and sometimes wealth management advice associated with your sale proceeds.
We always work in partnership with our clients’ accountants to ensure the best possible outcome for the vendor.
We are able to introduce you to suitably experienced accountants and tax advisers if your existing accountant is unable to provide the support you need through the process of selling your company, although in most cases the incumbent accountant is able to provide the advice and support required.
What are the different approaches to selling a business?
What questions should you ask before appointing an adviser or a broker?
I’ve previously appointed a business broker and paid a lot upfront. Will this happen again?
We regularly come across shareholders who have paid high upfront fees to a business broker and then not achieved a sale of their company.
A good corporate finance adviser should give you a realistic assessment of your company’s value and sale prospects before you engage them, and you should consider whether or not this meets with your expectations.
Most corporate finance advisers will charge you a fixed monthly fee over the period they are working on your sale. However this is usually less than 30% of the total fees expected on the sale, with the larger proportion of the fees only payable on the successful completion of the sale (“success” fees). A high upfront fee can be a warning sign that the adviser or broker thinks your company might be difficult to sell.
Some brokers charge the same upfront fees or monthly fees to all clients, irrespective of the size and complexity of each assignment. This may be a sign that they intend to do the same level of work on every assignment, rather than providing a bespoke service for each client.
A good corporate finance adviser will be upfront about their fees and how they charge.
Do I need to be located close to you in order to appoint Strategic Corporate Finance?
Strategic Corporate Finance work with company owners located across the North of England, the Midlands and East of England. Apart from a few key times in the process when it is important for us to meet face to face, most of our work can be done remotely from you.
What does it cost?
Corporate finance advice is provided by highly skilled and experienced professionals and our fees reflect this level of skill and experience. Good professional advisers will be worth their fees many times over in identifying good strategic buyers for your business, negotiating a good deal for you, shouldering the burden of the sale process and resolving issues at the due diligence and legal stages.
Our fees usually consist of 2 elements: a monthly retainer and a “success” fee. The success fee is only payable on the legal completion of the transaction and usually accounts for at least 70% of the total fees. There are other fees structures that we can use, depending on the circumstances.
We are very happy to give a fee quote. To do so, we need a basic understanding of your business so that we can start to get an impression of its likely value. We do not charge for initial meetings at which we would obtain this information.
Make sure you understand the different approaches adopted by business brokers and corporate finance advisers – the costs are often the same but the service is very different.