Latest news with #businesssale
Forbes
2 days ago
- Business
- Forbes
M&A
Experts across financial, academic and business fields agree that it is futile to try to time the market when making individual investment decisions. However, when contemplating the sale of a business, there are various internal and external considerations about timing the exit process that can help improve the chances of a successful outcome. Once a decision has been reached to sell a business, timing the exit starts with fundamental preparation and strategic planning. This is where engaging with experienced financial and legal advisers early can help enhance the likelihood of a successful outcome. Notwithstanding macroeconomic factors, the business must be seen as a sound investment for the next buyer. In making initial investment decisions, buyers usually focus on recent financial performance, future capital requirements, and the management team's quality. Regardless of a type of transaction or eventual buyer, a strong management team with experienced people in all key positions will be essential in driving the exit process and ensuring value maximization. If there is a significant open position in the executive management or commercial leadership teams, it is prudent to fill that position and allow the individual six to 12 months in the seat before an exit process. With respect to financial performance, the best time to exit is when the business is firing on all cylinders, exceeding budgets and demonstrating continued growth. Much of the buyer's financial due diligence focus will be on the trailing 12 months of earnings before interest, taxes, depreciation, and amortization (EBITDA). This cash flow metric and the company's capital expenditure profile are critical when determining the level of indebtedness a business can support and can directly impact valuation. However, equally important are the company's future prospects, which include demonstrating sustainable growth by accessing new markets, introducing new products/services, or taking advantage of industry trends. If, for example, near-term growth prospects require a capital investment, it may be prudent to make the investment and allow some time to demonstrate a ramp-up in financial performance before a sale. Buyers are often reluctant to increase value related to new or unproven growth initiatives, which can lead to a discount on the initiative's implied value or a change in structure (earn-out or future payments tied to the initiative's performance). Any sale process requires significant effort from all parties to facilitate comprehensive due diligence. This involves all aspects of the business, including operations, customer and supplier relations, HR, IT, health and safety, environmental, legal, risk management, financial, and others. The best advisers help business owners anticipate and prepare for such due diligence well ahead of starting the exit process. Due diligence creates significant demands on management's time; being well-organized and prepared minimizes surprises during the exit process. Savvy business owners are generally cognizant of macroeconomic, geopolitical, and other extraneous elements that impact their performance. For instance, timing an exit during a U.S. presidential election cycle is always complicated — not because buyers prefer one party or the other, but mostly due to the uncertainty of potential policy directions until the results are clear. While stock market performance might dominate the airwaves before and immediately after elections, near-term economic indicators, cost of financing, and tax policies are significantly more important to sellers and buyers. Geopolitical issues are increasingly impacting businesses across most sectors of the economy, particularly those exposed to tariffs, supply chain complications, labor issues (think port strikes), and more. One business might directly benefit from new or existing tariffs, while another might experience significant impacts in end-user demand because of prevailing tariffs. An industrial distribution business relying on a global supply chain may be severely disrupted by port strikes. While any single business owner cannot control these issues during a sale process, they should work with their advisers to be prepared to address business impacts and due diligence questions. Transactions that require antitrust, national security or other regulatory clearances may need several months from signing of definitive agreements to final closing. For example, a sizeable specialty materials business with strong competitive position that sells critical minerals to the Department of Defense can expect multiple lengthy regulatory reviews before closing. If this business owner wants to close a transaction before a certain date, they should account for the regulatory approval process and start the exit process early. Timing an exit process for a business requires introspection, strategic planning, and thoughtful preparation, while accounting for a host of internal and external parameters. Control the controllables and have a plan for potential surprises that invariably arise. Contact M&A experts Jeff Johnston and Arindam Basu. Visit Additional insights and market analysis in the technology, energy and Native American sectors. About KeyBanc Capital Markets KeyBanc Capital Markets is a leading corporate and investment bank providing capital markets and advisory solutions to dynamic companies capitalizing on opportunities in changing industries. Our deep industry expertise, broad capabilities and unique ideas are seamlessly delivered to companies across the Consumer & Retail, Diversified Industries, Healthcare, Industrial, Oil & Gas, Real Estate, Utilities, Power & Renewables, and Technology verticals. With more than 800 professionals across a national platform, KeyBanc Capital Markets has raised more than $125 billion of capital for their clients and has an award-winning equity research team that provides coverage on over 500 publicly traded companies. Securities products and services are offered by KeyBanc Capital Markets Inc., member FINRA/SIPC, and its licensed securities representatives, who may also be employees of KeyBank N.A. Banking products and services are offered by KeyBank N.A. This article is prepared for general information purposes only. The information contained in this report has been obtained from sources deemed to be reliable but is not represented to be complete, and it should not be relied upon as such. This report does not purport to be a complete analysis of any security, issuer, or industry and is not an offer or a solicitation of an offer to buy or sell any securities. KeyBanc Capital Markets is a trade name under which corporate and investment banking products and services of KeyCorp® and its subsidiaries, KeyBanc Capital Markets Inc., member FINRA/SIPC ('KBCMI'), and KeyBank National Association ('KeyBank N.A.'), are marketed. Securities products and services are offered by KeyBanc Capital Markets Inc. and its licensed securities representatives. Banking products and services are offered by KeyBank N.A. Securities products and services: Not FDIC Insured • No Bank Guarantee • May Lose Value Please read our complete KeyBanc Capital Markets disclosure statement.
Reuters
5 days ago
- Business
- Reuters
South Africa's SPAR plans to sell Swiss and UK retail businesses
JOHANNESBURG, May 29 (Reuters) - South Africa's SPAR Group (SPPJ.J), opens new tab plans to sell its retail businesses in Switzerland and in the United Kingdom after completing a strategic review of its European operations, the retail and wholesale group said on Thursday. The group, which owns several SPAR country licences of the Dutch SPAR group, has been trimming its international operations in order to "maximize the return on capital allocated". Last year it sold its loss-making Polish business. The group said it was in exclusive talks with an established UK-based business over the sale of its UK operation Appleby Westward Group. The potential buyer, which SPAR did not name, was "well positioned to develop and grow AWG in South West England," it said. In Switzerland, SPAR has been engaging established parties with extensive business interests in the region and experience in European food retail and distribution, it added. "The group approach has been to engage parties whose interests align with the growth ambitions of the local management teams and retailer partners, and will ensure continuity for employees, suppliers and customers," SPAR said. The Swiss business, with 300 stores, contributes 16 billion rand ($899 million) to group turnover, while the South West England unit contributes 6 billion rand. Internationally, SPAR will be left with Ireland, its biggest overseas business, and a joint venture in Sri Lanka. ($1 = 17.7956 rand)
Reuters
7 days ago
- Business
- Reuters
UK's Rentokil to sell French workwear business in $464 million deal
May 28 (Reuters) - British pest control company Rentokil Initial (RTO.L), opens new tab said on Wednesday it would sell its workwear, flat linen and clean room business in France to H.I.G. Capital in a deal that values the business at about 410 million euros ($463.8 million). The sale positions the company "more clearly as a streamlined pest and hygiene & wellbeing business", it said in a statement. Rentokil's $6.7 billion acquisition of Terminix in 2021 made it the largest player in the U.S. pest control market. Rentokil said it expects net cash proceeds of about 370 million euros from the sale, which it will use to pay down debt and invest in bolt-on mergers and acquisitions. The French workwear business made up about 6% of the company's total revenue last year. ($1 = 0.8840 euros)
Entrepreneur
27-05-2025
- Business
- Entrepreneur
How to Prepare Your Key Employees to Take Over Your Business
When there are more small business sellers than traditional buyers, your key employees may serve as a better alternative. Opinions expressed by Entrepreneur contributors are their own. It is well known that only 20% of small businesses that go to market sell, and the Silver Tsunami, that giant wave of baby boomer business owners who want to retire, makes the problem worse. Most of these businesses won't sell, and they will be shut down. Who is hurt if the company shuts down? The business owner can't access most of their net worth. The employees are out of a job. The community loses a major asset. Does the business need to be shut down? Consider this: The company has customers, revenues, trained staff, systems, channels of distribution and an infrastructure and ecosystem that it took years to develop. It's a shame to throw all that away! The traditional outside buyers are strategic buyers, financial buyers and lifestyle buyers. If there aren't enough buyers on the outside, what about looking on the inside? Related: Why an Increasing Number of Retiring Entrepreneurs Are Selling the Business to Their Employees Advantages of employee ownership Business owner: In addition to gaining access to most of their net worth, business owners gain control of the sales process. They do not have to meet and greet several potential buyers. When dealing with outside buyers, they read and analyze letters of intent from those who are interested, choose one and then struggle with an intense due diligence process led by the potential buyer's financial advisors. The whole sales process is much simpler when selling to key employees. Key employees: Key employees experience a major upgrade in their careers. Other employees: Other employees retain their jobs, and their "second family" remains intact. Community: The money that flows through the company remains in the community. That money helps support education, fire and police departments, road maintenance, etc. Also, suppliers, service workers and trusted advisors retain a client. Additional benefits: The chemistry between buyer and seller is established. Many times, a deal goes south between the seller and a stranger due to a lack of chemistry. The culture of the company remains the same. If a stranger buys the company, the culture will change in some fashion. If these cultural changes are too intense, many key employees may leave. Related: How to Transition to Employee Ownership Training your key employees Key employees know the company inside and out. They know the customers, the product and the systems, and the other employees like and respect them. However, there are functions that a good CEO performs, and the key employees are usually not involved, so they would need training. What are these functions? Strategic planning: This includes training in innovative growth strategies, planning in response to the competition and navigating changes in the market and the industry. Cash flow: It is imperative that the owner understands and implements cash flow management and forecasting. HR management: The owner should have a sense for evaluating the talent that is needed to perform specific tasks in the business. They also need to know when an employee is adversely affecting the company and what to do about it. Mindset training: The key employees will need to adjust their mindset from that of an employee to that of an owner. When they talk with the company's trusted advisors, they will need to have their owner hats on. Types of employee ownership Employee Stock Ownership Plan (ESOP): This is far and away the most popular form of employee ownership. Employee Ownership Trusts (EOTs): EOTs are intended to support employee ownership of companies and are becoming more common. Worker Cooperative: A business owned and controlled by its workers. All three of these types of employee ownership can work well with larger companies. They are complicated and very costly. They cost tens of thousands of dollars to set up and thousands to administer on a monthly basis. There are companies that specialize in setting up and administering the different types of employee ownership. Most require an EBITDA of $1 million or more before they even consider a company as a client. But what about the smaller companies that would like to consider employees in their succession plan? Selling the company to the key employees would not be a government-sponsored program. The deal would only include the business owner and the key employee(s). The owner would choose the key employees and their positions within the company going forward. Related: Selling Your Business to Your Employees Selecting key employees and moving forward The business owner should be very selective and careful in choosing their employees to own the company. They should have a good credit rating and be properly motivated to learn what is needed to be a business owner. You, as the business owner, should approach each key employee selected as a potential owner and, in passing, mention the possibility. After you have talked to each key employee individually, analyze their reactions in preparation to meet with them collectively. If they are interested, then you follow up with the process. The first thing you need to know is what your business is worth right now. You need to have a market valuation done. This will tell you how your company compares to similar companies in the same industry. Then, develop a plan to make the company effective, efficient and ready for scaling. Choose one key employee to be president while you remain the CEO, and train the president in all the functions listed above. The other key employees will be assigned management positions. When the company has grown and the cash flow is sufficient to support increased debt, create a plan to sell the company to the key employees.
Entrepreneur
26-05-2025
- Business
- Entrepreneur
Five Questions You'll Need to Answer to Sell Your Company
Opinions expressed by Entrepreneur contributors are their own. You're reading Entrepreneur United Kingdom, an international franchise of Entrepreneur Media. Why are you selling? When you're in a job interview, one of the first things people ask is: Why do you want to leave your current company? And you had better have a good answer; otherwise, how are they going to trust you? When you're selling your business, buyers aren't just looking at your numbers; they're reading between the lines, sizing you up, trying to get a read on how real this opportunity is. If you can't explain why you're selling, alarm bells start to ring. Is the market changing? Are the customers disappearing? Are the margins collapsing? It's unlikely someone running a thriving business will call it a day because they've "had enough." That tends to happen when the company is failing, and its founders are tired of living on the breadline. Your reason must make sense both emotionally and financially. In other words, it's got to be compelling. Age, health, or opportunity, these are compelling. Maybe you're in your 70s and you want to spend your twilight years touring the world with the love of your life. Perhaps your health is failing, and you're worried the next office plant might just outlive you. Or it could be that you've taken things as far as your finances, industry, geography, or ability will let you. When we sold City Cruises, I was approaching my 70s. I knew I didn't have the years to carry on making plans that I wouldn't be around to follow through. But, by then, I'd built a team that didn't need me anyway. The truth was we didn't have the resources to take the company global. We'd reached our capacity in London. Literally. We hosted 4 million passengers a year, and we were running out of places to put them. I didn't need to sell. In fact, a huge part of me didn't want to. But if we found a buyer that would pay the right price and could take the brand to the next level, it made business sense to sell. And if it makes sense, you've got yourself a story. Audited accounts …ideally covering the past three years. These are the official records reviewed and signed off by a qualified accountant. They confirm what you've reported to HMRC and Companies House, and they give the buyer a baseline confidence that the numbers are accurate and the business is being run properly. They're not just looking at what happened last month or what you say will happen in the summer. Three years enables them to spot trends, determine if you're growing, and mitigate any outliers. If you have three solid years of growth, that shows the kind of consistency they might be willing to invest in. If you don't, your story will be more crucial than ever. Management accounts Where audited accounts show the official picture, your management accounts show the day-to-day reality. They're internal working documents that help you (and the buyer) understand how your business operates in real-time. These reports might be issued monthly or quarterly, but your buyer will likely want to see at least the past two years' worth. Unlike with audited accounts, here you can tell your story on the document: ● There was a dip in Q2 due to a storm in the harbour ● Q4 is higher than usual because we opened for Christmas ● The cost of petrol went up, so our margins are smaller here. The more accurate these accounts are, the better positioned you'll be to answer detailed questions, justify your numbers, and predict what might come next. The Asset register A list of everything the business owns, with a realistic valuation next to it. It might include vehicles, machinery, equipment, IT systems, property. It's not just about how much the assets cost you; it's about knowing what they're worth today. Your audited accounts will show that your equipment has lost value over time, but the asset register is your chance to say, "Actually, it's still worth more than that." For instance, the accounts might say something's worth £1,000 because it's five years old. But in reality, it's in great condition and would sell tomorrow for £5,000. Buyers also need to know what they're getting. If you purchase a business that supposedly has ten company cars, but when you arrive, you can only find six, you need something to refer back to. Imagine that at scale. Perhaps there are 1,000 employees, and they all have laptops, phones, or tools they keep at home. Nightmare! Everything needs to be written down. When millions of pounds are changing hands, you can't rely on a conversation you had in the elevator. Organisational chart This is more than just a who's who in the company. You need to know what every employee does (what they think they're doing) and who they report to! The name isn't interesting. Your buyer doesn't want to know about Mary and why she's such a strong finance director, or where she worked previously. There's a story to be told, sure, but not about Mary. What they care about are roles and responsibilities. Are the roles clearly defined? Who reports to whom? What happens if a key person leaves or falls sick? Could someone else step in tomorrow? There will be time to assess people on their individual merits; that time is not the org chart. We care about whether the business is properly staffed, which tasks end up where, and how each department connects. It's not about who's in what chair, it's about making sure you even have the right furniture. If you answer the first five questions well, you'll likely get 100 more. Some will be universal, while others will be industry-specific. But one, perhaps unspoken, question underpins them all: What's my risk? So, get ready now! Implement processes, understand the data, and tell your story. The more prepared you are, the more you can mitigate the buyer's risk, and ultimately, make the money you deserve.
