Undercover Corporate Financier – Myths, Legends and Facts

14 August 2017 |
by Jo Haigh

As a child, I was captivated by Greek Mythology. The stories of the gods and goddesses had me, at least in my own mind floating around on a cloud, in a diaphanous gown sipping nectar as I cast my own particular spell on the common people below. Stories and good ones at that, but not real life of course.

After a quarter of a decade of helping private company SME owners build their business towards a successful exit, I have heard more myths about the whole process than anything I read as a child about the Greek gods I so adored. Sadly, lots of these myths have been publicized as facts by many of my ‘so called’ competitors.

So, in an attempt to separate fact from fiction, this is the truth, the whole truth and nothing but the truth about a private company business sale process.

You will sell your business in 6 to 9 months It can take 12 months+ and you may not sell at all
Your business is worth whatever it has been valued at Your business is worth what someone will pay, what you will accept, and assumes the buyer has the funds
Profits are very important People are much more important, if you are the person generating the profits your business is worth less
You will get all the deal value on completion No you won't, earn outs and deferred sums are most common
Earn outs never work out Yes they do, if they are negotiated properly at the start
Your brand is really important In most cases, you may think it's more valuable than a buyer will
Everything is negotiable No it's not, you need a "will not compromise on list”, just as a buyer will have
To do an MBO you need a management team with lots of money No you don't, but you do need a team who understand they have to have some skin in the game to win
Your accountant can sell your business No, they can't. They can help, but that's not their forte by and large
Solicitors will protect you from risk Keep the lawyers out of all deal negotiations they are not commercial
You can't do a deal if you only have one bidderYes you can, but it needs care
You don't need a corporate finance adviser Actually, this is true, but good luck. When things get hairy as they will, you may find yourself well out of your depth
You will sail away into the sunset on completionNo, you may suffer vendor remorse if you don’t plan

So, there it is, although we all enjoy a good story and the facts may not be as palatable. Sitting on a cloud, isn't as far as I know, realistic just yet!

To learn more about our process and service for selling a business please click here.

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