Adviser - Spring 2016

There is plenty of advice and media coverage for new business start-ups. But what if you are thinking about selling your business, or handing it over to internal colleagues through a management buyout? Managing partner Tim O’Connor lays out ten pieces of invaluable advice to help the potential business seller 10

Tips for Succession and

deferred consideration or possibly an earn out whereby the business assets are sold for a lump sum with the right to further payments that are contingent on the performance of the business over a defined period. 4) The crying game If you do enter into an earn out arrangement, make sure it is clearly drafted, without ambiguity and considers the games that either side might try to play to maximise/minimise an earn out. If it ends in tears, make sure that they aren’t yours. 5) What deal are we doing? It is surprisingly common to see two sides walking away from the early discussions of a sale thinking they have agreed to quite different deals. Clear and concise Heads of Terms help to ensure that both sides know what they are agreeing to and they also serve as a good briefing document for the

1) No time like the present Start grooming your business for sale at least two years in advance of your planned disposal date. This might mean bolstering the management team, to make you less critical within the organisation, which might also then help to identify a potential buyer. You should also review the financial information you need and keep. Make sure your business is fit for your disposal plans. 2) Is there anyone out there? There is a chance that you already know someone that is interested in your business,

so look to the obvious exits first. Marketing a business is expensive and difficult and a direct approach to someone you think could be interested might yield benefits. Management buyouts are still very common and successful, so look inside as well as out. 3) What is the right value? Probably if neither the buyer nor seller agrees the value then it is about right! Sellers have all sorts of emotional investment in a company that a buyer is never going to pay for. Consider palatable options to help push the price of the business up, such as


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