Noel Penrose has 30 years’ experience in marketing communications completing 100+ M&A transactions and working in senior roles in finance, marketing and general management for Omnicom Group, driving acquisitions and turning around underperforming operating companies.
1. BE CLEAR ABOUT WHY YOU ARE SELLING AND WHAT YOU WANT FROM THE DEAL
Is it an exit, a transition or a platform for growth, development and expansion? This will drive and shape the deal you do. Making a transaction and forming a relationship may require very different structures.
2. HAVE A CLEAR POINT OF VIEW
Why are you different and attractive? You need to differentiate yourself from others in your market space and be passionate about the work.
3. GET THE TIMING OF THE DEAL RIGHT
Don’t leave it too late. If you want to exit in 5 years you need to be selling in 2! Make sure you have the energy for an earn-out as well as the engine for growth still in the business.
4. GET GOOD ADVISERS
If you are not familiar with warranties, restrictive covenants, due diligence and the rest, get help from someone who is. Don’t get over-emotional about technical aspects of the contracts. They are a necessary insurance policy that allows the acquirer to commit to the deal.
5. DON’T LET THE DEAL DISTRACT YOU FROM RUNNING YOUR BUSINESS
Stay focused on clients and management.
6. BE CLEAR ABOUT HOW YOU FIT INTO THE ACQUIRER’S PLANS
What value you add to them and why they are interested in buying your business, e.g.:
a. Your revenue and profitability are strong
b. You have exclusive IP or know-how
c. You are active in a sector they are keen to enter
d. You have key clients they wish to acquire or contacts they value and wish to engage
e. You offer a leadership solution for another part of their business
7. SPEND TIME GETTING THE CHEMISTRY RIGHT
Do you see the world the same way?
8. PREPARE FOR SALE WELL IN ADVANCE
By eliminating ‘lifestyle’ expenses from the P&L account, avoiding add-back adjustments to profit normalisation that will need to be explained.
9. HAVE SOLID ACCOUNTING SYSTEMS
Show integrity, reliability and professionalism as an everyday part of your business.
10. UNDERSTAND HOW YOUR BUSINESS MODEL WORKS
How you make money and how and where your growth comes from. Consider your business performance; buyers like consistent, solid growth and profitability. Develop forward plans with credible assumptions and goals.
11. MAKE SURE YOU WILL BE COMFORTABLE
Operating in a corporate environment; some entrepreneurs simply can’t work for anyone but themselves.
12. HAVE CLARITY OVER MANAGEMENT RESPONSIBILITY
Plan for management succession; there has to be ‘one throat to choke’ so shared leadership roles are uncommon.
13. LOCK YOUR KEY PEOPLE IN
Before you begin discussing a sale of your business and work out how you will reward loyal staff from the proceeds; the buyer will not want to pay twice.
14. TAKE REFERENCES
Speak to others who have recently completed deals with your prospective acquirers.
How you will mine your new partners contacts and relationships & leverage their network.