There are various reasons why you might want to sell your business. The main reasons tend to be that you feel you have got the business as far as you can take it and you now want to realise some value.
Preparing for this moment is essential since we know that the planning needs to start months, if not years in advance. We will equip you with the tools and the guidance to give yourself the best chance of a successful exit.Why should an acquiror be interested in your company rather than others?
Is the company currently profitable and is it generating cash?
Potential acquirors are likely to be only interested in buying a business if there are valuable assets or impressive future revenue streams.
Even if your business is currently not performing at its peak, if an exit is what you are looking for you cannot wait until you reach your peak to start planning. Speak to us now.
Does the company have a “story” ?
Do you have a strategy? Are you following a path that is going to differentiate your business. Is the strategy realistic and do you have the ability and resources to follow it through.
An acquiror will be paying a premium for this and so therefore it is vital that the “story” is clear, realistic and achievable. Is their suitable depth of expertise and management within the business?
Buyers will want to ensure the management in the company have the appropriate expertise to continue running operations once the company has been sold. Or if not, that this expertise can be easily brought in without significant risk to the overall plan.
This is particularly important for smaller companies where they unlikely to have breadth and depth of experience and expertise.
Acquirors will most likely want the senior team to remain after the sale.
Do you have a robust underwriting methodology?
The business practices need to be sound. Does your business have a robust underwriting methodology. This is ultimately going to come down to the balance between acquisition costs, underwriting, and the net result which is collections and profitability. If your default rates and ultimately your bad debt rates are running high then this will need to be resolved before a sale, otherwise acquirers will seek to impose a large discount to compensate for this weakness.
Is your technology scalable?
Is the technology used by your business up to scratch? The key engine is the loan management system. Can it cope with the various permutations? Can your system deal with complex reporting requirements? Is the information technology you use limited in scope by the amount of data it can handle? If so, this would suggest expansion is not expected or planned for.
Have your accounts been audited?
Your accounts should be audited by a reputable auditor who has experience in the alternative lending industry. This will help reassure potential buyers that the financial information can be relied upon.
Are there minimum contractual future liabilities in place?
If the company has capital commitments and long leases on say property, this can be either an advantage or disadvantage to potential acquirors. It is important to build in flexibility where possible. So for instance with a property lease build in break clauses and minimise dilapidation liabilities.
Are all returns with Companies House and HMRC are up to date
Acquirors will also expect the company to be up to date with its filing with Companies House and HMRC; as well as
Are the regulators satisfied; and are there any ongoing investigations?
Any open issues or investigations with the FCA could scupper a sale. Therefore it is vital that in the period from now to exit that your compliance and internal process is as good as you can possibly make it.
Is your business structure simple?
Complex business structures will often cause problems for an acquiror. Keep it simple even if it means the overall tax regime may cost you a touch more. You need to weigh this up.
How can Wisteria help?
With our wealth of experience in the alternative lending industry, we are ideally suited to help you groom your business for sale. Feel free to get in touch