Firstly, congratulations.

You have built a successful business that is attracting interest from others, but what should you do next…?

It is always flattering to receive interest, and it may make you re-evaluate your exit plans. If this is the case, it is worth answering the following questions with your shareholder group to ascertain whether it is worth entertaining a conversation.

Do you want to sell?

Most answers to this will be…if it’s for the right price. However, if the shareholder group isn’t aligned with this thought process, starting a conversation with a 3^rd party may be an unnecessary distraction.

In this instance, it may be worth speaking to CN Strategic Advisors to understand the options to re-align the objectives of existing shareholders for a future transaction.

Do you know the business?

Are they a direct competitor?

Are they acquisitive and able to fund an acquisition, or do you see a risk in providing sensitive information for a transaction that may not materialise?

Do you see a greater risk in having a conversation and potentially sharing information than the likelihood of entering a transaction?

If you do want to start a discussion, it is worthwhile getting a Non-Disclosure Agreement (“NDA”) in place prior to sharing any information.

Why do they find your business attractive?

Are they the right buyer – for you, for the future of the business, to deliver the most value or meet with your personal and business objectives?

Why do they find your business attractive? What do they value, and is this in line with your own assessment of your competitive advantage?

If what they value is different to your USPs, there may be others that would value your business more highly. Although assessing what they see as valuable may actually re-shape your strategic direction.

Knowing what they value in your business will also be useful to outline in future information shared with them, or in sales memorandums should you speak with others via a ‘benchmarking’ exercise or marketing process.

What is your business worth?

Assess what you think your business is worth and what you require personally from selling your equity – is there a valuation gap that needs to be closed before entering into more detailed conversations?

It is always good to set your own expectations first, before you start looking to negotiate theirs.

Do you want to benchmark their offer?

You may look to ‘benchmark’ their offer against others by speaking to 1 – 2 others to ascertain alternative interest and offers.

This will bring a greater risk of others being aware that your business is for sale, but it will provide you with better visibility of alternatives.

Who are your advisors?

CN Strategic Advisors can help you to answer the above questions and deliver an M&A transaction professionally and efficiently.

We can help assess an existing approach / offer and provide visibility on fair values / market multiples, as well as discreetly benchmarking against others (as appropriate).

We can also advise on the information that is usual to share in early conversations, how to present it and what not to share. Sharing financial information that is inaccurate or unrepresentative of the business post transaction may negatively impact on the initial offer received or ongoing valuation negotiations.

Alternatively, we can run a full process to market the business to create competitive tension to enhance value through the process.

We also provide you with a buffer so that:

• Responses can be thought-out and thorough
• You can continue to run your business (rather than getting distracted by a transaction resulting in performance suffering)
• You can more easily retain a good relationship with the potential buyer post transaction or should the transaction abort

If you have received interest and don’t know where to start, speak to us for a free discussion about the offer, your business, your goals and next steps.