The questions we hear most often from owners weighing up a sale, a value-growth programme or entry into a new market. The answers are short and specific. If something is missing, write to us.
Selling a company
How long does it take to sell a company?
Nine to twelve months, from the decision to the transfer of funds. The first two months go on documents and the valuation, the next four on conversations with buyers, the last six on due diligence and negotiating the agreement. The full timetable is in How long does it take to sell a company.
What does running a sale process cost?
We charge in two parts: a fixed fee for preparing the process and a success fee payable only once the transaction closes. The fixed part is agreed up front, so you know it before we start. The principles are set out on the How we work page.
Will the market find out my company is for sale?
Not while we are approaching buyers. The first document they receive is an anonymous teaser with no company name, address or owner details. The name appears only after an NDA is signed and after you have approved that particular investor. The detail is in our guide to the teaser and the memorandum.
What if no offer satisfies me?
You are under no obligation to sell. The process can be stopped at any stage, including after indicative offers have been collected. Owners sometimes come back a year or two later, with better numbers and a higher valuation.
Do I have to stay with the business after the sale?
Usually yes, but not for long. A buyer typically expects a transition period of three to twelve months, to take over the relationships and the knowledge. Part of the price is sometimes linked to results after the deal, which is an earn-out. The length and scope are negotiable.
When is the right time to start preparing?
Twelve to twenty-four months before the planned sale. That is roughly how long it takes to tidy up the areas a buyer will examine anyway. What they examine is collected in the red flags checklist.
Valuation
What is my company worth?
In SME transactions the starting point is usually normalised EBITDA multiplied by a multiple drawn from comparable deals in the sector. The result is then adjusted for net debt and the gap between actual and normal working capital. We compare five methods in What is my company worth.
What raises the multiple most?
Recurring revenue, low customer concentration and whether the business runs without the owner. A buyer pays for predictability, not for one good year. Those three areas come first in our red flags checklist.
Is the valuation charged separately?
The transaction valuation is part of the diagnosis, which is charged at a flat fee, so you know the amount before we start and it does not depend on the outcome. The diagnosis is a separate engagement with its own agreement, so that you can decide about going further only once it is finished.
Due diligence and price
What does a buyer look for in due diligence?
Twelve things that come up in every review: dependence on the owner, customer concentration, quality of financial data, documentation behind EBITDA adjustments, working capital, liabilities, tax risk, title to assets, employment matters and rights to the trade mark and software. The full list is in the red flags checklist.
What is price chipping and how do you defend against it?
It is a buyer cutting the price after due diligence, justified by risks found in the review. A standard tactic, not a sign of bad faith. The defence is to find those risks first, price their effect before the conversation, and close off the room for adjustment in the agreement. More in Price chipping.
Can a company with debt be sold?
Yes. Bank loans, leases and shareholder loans are usually treated as net debt and deducted from enterprise value when the price for the shares is set. Debt does not block a transaction, but it has to be calculated and documented before conversations start.
Shareholders and structure
What if a co-shareholder does not want to sell?
It depends on the articles of association. They often contain drag along and tag along provisions covering exactly this. If they do not, the first step is a conversation about the structure of the deal, because a buyer usually wants control or the whole company.
What happens to the property the business operates from?
That is decided at the start of the process. The property can be included in the transaction or carved out and leased to the new owner. The second option lowers the transaction price but leaves you an asset and a steady income.
Entering a new market
Where do you start with entering a new market?
With validation, not with conversations with partners. Validation takes four to six weeks and ends with a recommended entry model, or a recommendation not to enter. The ten areas to settle before starting are in the readiness checklist.
How long does entering a new market take?
First meetings with real partners usually come three to five months after active outreach begins. An agreement with a first partner, or a first order, usually after six to nine months. Validation comes before all of that and takes four to six weeks on its own.
Working together
What does the first conversation look like?
It takes thirty to forty-five minutes and is free of charge. We talk about where the business stands, what you want to achieve and in what timeframe. If we think it is not worth starting, or that the problem lies elsewhere, we say so. Book a meeting.
Who runs the project?
We do the work ourselves, not through juniors. The person you speak to at the start runs the project to the end. The terms are set out on the How we work page.