6 Step Guide

The 6 Step Guide to a Successful SaleSelling Your Business

Welcome

Welcome to KBS Corporate

www.kbscorporate.com

KBS Corporate is one of the largest independent business brokers in the UK, specialising in selling companies with a turnover

of £200,000 to £20 million.

KBS Corporate has extensive knowledge and experience across a wide range of sectors, enabling us to offer sound advice on

achieving the maximum value for your company.

The sectors in which KBS Corporate operate include:

This guide explains our proven 6 step approach to the sales process, which combined with our extensive market knowledge,

can help you achieve the maximum value for your company.

• Construction & Building

• Domiciliary Care & Care Related

• Engineering

• Import and Distribution

• IT / Technical & Web

• Manufacturing

• Specialist / Niche & Miscellaneous

• Waste Management & Recycling

• Print / Publishing, Advertising & Media

• Professional / Financial & Medical

• Property Related / Land

• Recruitment & Labour Supply

• Retail / Wholesale & Supply

• Services

• Transport / Haulage & Motor

Our MissionTo create competitive tension throughout the sale process to ensure that we achieve and exceed

our clients ultimate business sale objectives.

“By investing heavily in training

our employees to the highest

standard we aim to ensure that

our clients receive the highest

standard of customer service

with professional advice on

hand when required”

Planning Your Sale

Motivations For Sale

Structuring Your Sale

Finding Your Buyer

What Drives the Value of Your Business?

How We Have Influenced Value

The 6 Steps of Our Unique Approach

Practical Examples

Recent KBS Corporate Sales

Our Business Partners

The 6 Steps in Detail

Regional Contacts

5

6

7

8

10

11

12

14

18

20

21

27

Contents

Contents


5

Planning Your Sale

Planning Your Sale

We understand that the decision to sell your business is a difficult one that is not taken lightly, and it is made all the more difficult if you are focused on the day to day

running and growing of your company.

Often, at a certain point in a company’s lifecycle it becomes apparent that important choices need to be made.

The diagram below outlines these choices:

Without investment or fresh impetus between points A and B a business risks falling into decline.

KBS Corporate has identified these parameters as the best time to consider selling your business; we can highlight the future potential of your company to a potential purchaseror investor.

A B

BUSINESS GROWTH

BUSINESS PLATEAU

CONTINUED INVESTMENTNEW IDEAS / MANAGEMENTRESULTS IN A FRESH IMPETUS

DECLINING BUSINESS


6Motivations For Sale

Taking the decision to sell your company is likely to be as a result of differing factors, each business owner has a different reason for looking to sell their business.

Below are a few of the most common reasons:

Motivations For Sale

“ I want to enjoy the fruits of my labour” The sale of your business provides financial security for business owners who may have built their business over a number

of years. The financial gain that a sale could potentially yield is a reward for many years of growing and nurturing your

business.

“My business needs new investment / new blood” Many business owners wish to remain actively involved in the running of their business but lack the financial muscle or

skills required to fully realise the company’s potential. A partial sale allows many owners to drive the business forward

with fresh ideas or investment.

“I wish to explore new avenues” Re-setting of personal goals is normal for many business owners. Having developed a company from its roots, some

business owners relish a new challenge or become burdened with extra duties involved with running a larger organisation,

often this creates the desire to sell and move on to pastures new.

“ I want to retire / spend more time with my family” Business owners dedicate their lives to growing their business leaving little time to focus on personal time. Selling a

business allows business owners to address their work / life balance and create an opportunity to enjoy the fruits of

their success.


7



For a number of reasons, deals can be structured in a variety of different ways. Listed below are the typical examples of different deal structures.

Cash on Completion

‘Cash in full on completion’ deals are often achieved. Buyers gain immediate ownership of the business allowing you to relinquish all ties with the business (unless a handover period or

employment is agreed with the new owner). An all cash structure is ideal if you are looking at an immediate exit or retirement.

Deferred Payments

This is where a percentage of the price is paid to you on a fixed basis over a period of time. The ‘deferred’ part is usually a vendor loan and normally put in place to help the buyer

finance the deal. It may also be paid out of future profits.

Elevator Deals

These are for ambitious sellers – ‘cash-in some of your chips and keep playing’. Such deals provide a mechanism to link the purchase price of a business to the potential future value of

its profits. Vendors’ ongoing involvement is required in order to drive and elevate future profits and value. This has the potential to truly maximise value and is ideal for companies in

infancy growth stage, young and ambitious sellers, entrepreneurs, de-risk, enterprise etc. The concept is exciting for those still wishing to ‘play the game’.

Performance Related Payments and Earn Outs

A performance related payment structure is when an initial consideration is made on completion and then secondary performance related payments are made subject to certain

performance caveats. You can maximise the deal by linking it to future growth and the buyer can ‘hedge’ risks and finance the deal from future profits. An Earn Out is when the seller

remains in the business in order to achieve the agreed performance criteria.

Retention

Retentions are also a form of deferred payment. The idea is that the purchaser pays all the money on completion but retains a proportion, in an Escrow account held by the vendor’s

solicitor, in lieu of certain events occurring.


8Finding Your Buyer

• To find a range of genuine buyers, there is no substitute for diverse and extensive research. Our

comprehensive Buyer Intelligence department generates potential targets through a combination of :

- Desktop review

- Sector expertise

- Discrete enquiries to our vast network of contacts

- Market news/intelligence review

- Interrogation of our sector deals databases

• Targets are researched for RELEVANCE, APPETITE, FINANCIAL POSITION and

DELIVERABILITY, and filtered down accordingly to a core of companies with a strong rationale

and capability for buying your business.

• We think ‘outside the box’ to generate a credible list of genuinely interested parties.

When identifying potential buyers, no stone is left un-turned

Finding Your Buyer

Alongside our research in some cases we will also offer additional areas of marketing and prepare a

suitable online/offline marketing strategy incorporating website listings, broadsheet and trade advertising.

This will ensure that we market your business to the widest possible audience and leave no stone unturned.

This additional marketing is aimed at procuring the ‘opportunistic purchaser’.

Marketing Your Business

Potential acquirers sourced via extensive research

Step 1

Step 2

Step 3

Step 4

Step 5

Step 6

Outcome Your Objectives Achieved

Filtering and selection process

Genuinely interested parties identified

Offers sought

Bidder selection

Sale completed


9

Finding Your Buyer

Benefit from our track record of completing sales to all these types of buyers

Direct Competitor• Likely to already understand the Business

• Easier to identify

• Obvious synergies

• Confidentiality is key

Strategic / Synergistic Purchaser• Potential for complementary synergies

• Confidentiality less of a concern

• Should have management capability

Overseas Buyer• Less likely to have preconceptions of

the Business

• Legal and cultural issues

• Potential for UK presence is a

strong motivator

• Exchange rates

MBO or MBI• Maintains confidentiality

• May avoid marketing the Business

• Quality of management

• External funding required

• Cash v retention of interest

• Reporting and controls post deal

Financial Purchaser• Historically have paid more than

trade buyers

• Future growth needs to be demonstrable

• Retain an interest

• Warranties

• External funding required

Private Individual / Opportunistic• Quick decisions

• May bring strategic input

• May not have a management team

• May not be any synergies

YOUR BUSINESS

0 9


10

What Drives The Value

Of Your Bsuiness

Although accountants and advisors state that there are many technical ways of valuing businesses, the reality is that value is determined by how much a buyer is prepared

to pay. Experience from our deals tells us that different buyers are prepared to pay very different prices for the same business often with a range between the lowest

and highest bid.

Factors affecting value

In our experience the key factors that influence the value placed on the business are:

1 Quality/loyalty of customer base

2 Opportunity for profitable growth

3 Sustainability of earnings/quality of profits

4 Strength of brands/Intellectual Property Rights

5 Skills of management/staff

6 Ease of integration/synergies with the purchasers business

7 Proven track record

8 Positive market demographics/opportunity

9 Defensible intellectual property

10 Capital/working capital requirement

What Drives the Value of Your Business?

We identify and present the value drivers of your business


11



By guiding clients through this Six Step Process we are often able to significantly over achieve against your price expectations, evidenced in the 7 transactions below:

x7 x5 x6 x17 x10 x8 x9

An average uplift of over 81% across these

transactions was achieved through applying the

principles of the 6 Step Sales Process

CONSTRUCTION

1

0

Actual Value Achieved

Expected Value/Initial Offer

SECTOR

VA

LU

E (

£m

)

BUSINESSSERVICES

HEALTH INDUSTRIAL

2

3

4

5

6

7

8

9

10

11

WHOLESALE& DISTRIBUTION

RETAILIT

Profit MultiplesAchieved


12The 6 Steps Of The Sales Process

Our extensive experience of selling businesses has enabled us to really understand what is key to a successful transaction and value maximisation. Our 6 step SalesProcess ensures the sale of your business is handled with professionalism, attention to detail, and is focused on delivering the best possible outcome for you.

The 6 Steps of the Sales Process

Our 6 Step Approach Sales Process maximises your value

Understanding the Value Drivers

Presenting the Opportunity

Buyer Intelligence and Marketing

The Information Memorandum is our key sellingdocument and must present all relevant financial andbusiness details, concentrating on key benefits to thebuyer.

• Detailed financial and technical informationgathering

• Draft Information memorandum prepared for yourapproval

• Feedback and input discussed

In order to maximise your value we must first fullyunderstand your business and objectives:

• In depth meeting and fact find• Appraise and evaluate your business• Understand the key value drivers• Discuss deal structures and your objectives• Agreement reached on confidentiality and nondisclosure of information

In order to maximise value we must present theopportunity to a diverse, extensive and qualified rangeof potential acquirers.

• Buyer list created by research team• Input and authority gained to approach potentialacquirers

• Project commenced to contact the KBS Corporatedatabase of registered buyers

• Opportunity circulated amongst an extensive list ofprofessional contacts

• Marketing and advertising campaign discussed, agreedand implemented

Formal instructions received andagreement reached on project brief

and objectives

Detailed Information Memorandumprepared and ready to present to

potential acquirers

Most suitable acquirers identified,filtered and approached

StepOne

StepTwo

StepThree

WHAT W

E DO

OUTPUTS


13

The 6 Steps Of The Sales Process

The 6 Steps of the Sales Process

Our 6 Step Approach Sales Process maximises your value

Buyer Meetings and Offers

Bidder Selection

Completing the Deal

With final offers in a carefully considered decision mustbe made based upon:

• Price and deal structure• Ongoing involvement• Likely impact upon staff• Deliverability of the deal

Suitable legal, accountancy and taxation expertiseintroduced by KBS Corporate as required

Having identified multiple interested parties we aimto create bidder tension and a competitive process.

• Advice and guidance provided prior to buyermeetings

• Detailed offers sought from seriously interestedparties

• All offers and negotiations handled on your behalfby our deal executives

• Competitive tension maintained throughout theprocess

Our aim is to maintain active management of thecompletion timetable throughout due diligence and thelegal process.

• Agree, monitor and project manage timetables• Fully liase with all parties throughout the final stages• Ensure momentum is not lost

Formal offers received

Details of the written offer are formalised in the Heads of Terms

Sale Completed

StepFour

StepFive

StepSix

WHAT W

E DO

OUTPUTS


14Practical Examples

Practical Examples

Turnover £5m, profit £1.1m2 equal shareholder directors involved in the business wanting to get £2.5m

each for a full exit

Step 1

Step 2

Step 3

Step 4

Step 5

Step 6

Outcome

• We advised that the 6 Step Sales Process would maximise shareholder value• Early meetings with the shareholders helped us to identify specific gaps in themanagement team which we were able to help fill

• Our Buyer Intelligence department had identified this specific sector as fragmented withopportunity for consolidation

• Financial institutions were targetted as the most likely buyer-type to benefit from thepotential consolidation

• State of the art Information Memoranda identified the business as being at the forefront of itssector in terms of customer service and sales process

• Contracted revenue growth allowed for value enhancing run-rate profitability to becalculated

• Vendor financial, commercial and legal due diligence reports were delivered to selectedparties in advance of outline offers

• Key commercial and legal points were negotiated with the preferred parties in advance ofselecting winning bid

• Purchasers were closely vetted to assess the best cultural fit with management team

• 28 days from signing of Heads of Terms to completion with no variations to the agreed deal

Partial sale valuing business at £10.8m (9.8 x operating profits)

Expectation £5m

Case Study 1 : Business Services Business

Our Added Value

c.30 buyers including trade and financial purchasers researched and contacted

24 Information Memoranda issued

6 Outline offers

4 Final bids

1 Sale


15

Practical Examples

Practical Examples

Turnover £15m, Profit £800K4 equal shareholder directors all involved in the business,

wanting to get £1m each and a full exit. Had already received an approach

Step 1

Step 2

Step 3

Step 4

Step 5

Step 6

Outcome

• We advised that the 6 Step Sales Process would result in a better value for theshareholders rather than pursuing one interested buyer in isolation

• Focused on targeting complementary suppliers of the company’s customers andinternational businesses as the sector in the UK was quite niche and fragmented

• Focused on buyer rationale:- Blue-chip clients- Market opportunity- Consolidation opportunity and cost savings- Calibre of non-vendor management

• Detailed areas negotiated including the conditions surrounding, and timing of deferredconsideration, future vendor roles

• Due to the contracting nature of the business, margin information was highly sensitive and wasonly divulged when absolutely necessary

• The offers sourced through the 6 Step Sales Process were too strong for the originalinterested party to match, and they fell away from the process at this stage

Sale £7m (8.75 x operating profits)

Case Study 2: Construction Company

Our Added Value

c.150 buyers including overseas and financialpurchasers researched and contacted


3 Outline offers

2 Final bids

1 Sale

Expectation £4m


16Practical Examples

Practical Examples

Turnover £8m, Profit £1mKey shareholders including Financial Shareholder

looking to exitStep 1

Step 2

Step 3

Step 4

Step 5

Step 6

Outcome

• We advised that the 6 Step Sales Process would maximise shareholder value. Exploredexpectations of majority shareholder and the two incumbent private equity institutions

• Search and selection rationale discussed with shareholders • Use of sector and buyer intelligence with in-depth research on key targets• Focus on targeting trade buyers both UK and overseas and private equity institutions withmedia sector

• Information Memoranda identified key value added features:- potential synergy benefits to trade purchasers - opportunities of rolling out company specific selling techniques into otherportfolio companies- calibre of management team

• Coaching of management team and assistance with management presentations

• Delivered vendor due diligence reports to select parties• Negotiated completion mechanism to help increase the speed of execution

• Deliverability of deal structures assessed • Purchasers vetted to align management styles and deliverability

• Vendor protection through negotiation of warranties in Sale Purchase Agreement• Completion mechanism prevented value leakage post transaction

Sale £4.5m (4.5 x operating profits)

Case Study 3: Importing & Distribution Company

Our Added Value

c.140 buyers including overseas and financialpurchasers researched and contacted


5 Outline offers

2 Final bids

1 Sale

Expectation £3m


17

Practical Examples

Practical Examples

Turnover £1m, profit £200kHusband and wife shareholders

looking to retire

Step 1

Step 2

Step 3

Step 4

Step 5

Step 6

Outcome

• Our initial consultation of the business helped us to identify that our 6 step sale processcould optimize buyers by looking beyond the obvious strategic and trade buyers

• Our buyer intelligence department carried out extensive research and approachedcompetitors, who could take advantage of synergy benefits and complimentary businesses,who can take advantage of economies of scale

• Our market leading Information Memorandum helped to identify key Uniques Selling Points ofthe company. The IM also detailed a full financial analysis and identified areas of growth thatcould be explored

• Outline offers were collected in writing and our highly skilled negotiators helped to identifythe quality of offers, advising the vendors of this

• Key commercial and legal points were negotiated in advance of selecting the final bids

• Completion took place and the vendors were happy with a full exit and left to enjoy their retirement

Actual sale valuing business at £1m (5 x operating profits)

Case Study 4 : Transport Business

Our Added Value

c.86 buyers including trade and financial purchasers researched

and contacted


2 Outline offers

2 Final bids

1 Sale

Expectation £800k


18Recent Sales


LondonT/O: £5.3millionNP: £447,000Price: £5million

Clothing import and distribution company

Lollipop Clothing Ltd

T/O: £10million year end 2004Order book value

in excess of £25millionPrice: £undisclosed

Civil engineering & public work contractors

T/O: £4.1millionAsking Price: £1.5million

Meetings & events management

East MidlandsT/O: £2million

Adj Net: £250,000Price: £1.5million

Dry lining, suspended ceiling & partitioning

South EastT/O: £8.8million

Asking Price: £5million

Cleaning/security business

T/O: £1millionAdj Net: £550,000Price: £3.5million

Established domestic service franchisesystem with 180+ franchises

South WalesAdj Net: £447,000Price: £undisclosed

Civil & structural engineering consultancy

T/O £500,000Price: £undisclosed

Road haulage

South Sheffield - Close to M1Rental income: £150,000Freehold price: £2.3million

40 self-contained mixed use units

Capacity up to: £10millionCurrent profits c. £425,000

Price: £undisclosed

Modern methods of construction (MMC)

Leicester Ceiling

Supplies Ltd

Sisson & French

Limited


Coating company

Staniforth

T/O £955,000Adj net £250,000

30% year on year growthPrice £undisclosed

Corporate telecoms solutions provider

T/O £1.01millionPrice: £undisclosed

Haulage company


Cookware shop & internet tetailer

Regionport

Amorica

T/O £900,000Price: £1.45 million

Hazardous waste transfer & treatment

Tank Cleaning

Services Ltd

CPSGroup Limited


19

Recent Sales


YorkshireT/O: £3.5million Year end 2005

ANP: £700,000Price: £undisclosed

Bathroom products manufacturer

T/O £565,000 GP £196,000

Price: £5.5million

Specialist roofing contractor

Price: £4million

Freehold developmentopportunity

Price: £4.6million

Import & distribution of camping and caravan equipment


Specialist shellfish wholesaler

Price: £1.1million

Sale of caravans, motorhomes & accessories

Price: £1million

Coach hire

Price: £600,000

Door manufacturer

T/O: £4millionNP £550,000


Electronics manufacturer

Fenland Flat

Roofing Ltd

KMD

Shellfish Ltd

CSM Electronics

Ltd

Clarks

Farm

T/O £1.4 millionPrice: £undisclosed

Logistical & engineeringrecruitment specialists


Castings agency

Mad Dog

Castings Ltd


Security & protection services

T/O £1.5millionGP 40%


Fire & security

Apollo

Protection Ltd

T/O £1.58 millionPrice: £975,000

Traffic management systems

Centurion Site

Services Ltd


Estate agency & mortgage broker

A & E Estates

Ltd


2 0Our Business Partners

We are here to help clients achieve their goals

Our Business Partners

Royal Bank of Scotland, as a business relationship bank, aims to bring a seamless ‘one bank’ service to all its customers, RBS business areas work with eachother, providing the right mix of expertise to deliver optimal solutions to your business. Every customer is provided with a dedicated Relationship Manager,offering the financial expertise and flexible thinking needed to make their business succeed.

NatWest, truly appreciate the importance of being an integral part of your business, which is why every business customer has a dedicated Business RelationshipManager. As communication is paramount if business opportunities are to be maximised, our Business Relationship Managers can be contacted via directtelephone landline, mobile or email; giving you the comfort of knowing you can make contact as and when you need them.

Acorn Commercial finance are industry leaders in helping people secure the business of their dreams. The specialist team at Acorn are widely recognised ashaving fantastic contacts within the commercial divisions of high street banks as well as strong relationships with a number of specialist lenders.

The experience within the organisation means that working with Acorn goes beyond just securing the right finance package, they can also assist you in choosingthe right kind of enterprise as well as providing expert guidance on getting the best from your business.

Because Acorn are independent, they only ever give you honest, impartial advice.

Cattles Invoice Finance is one of the leading providers of financial solutions for small and medium sized businesses in the UK. We work alongside you to findone-off or tailor-made solutions to suit you and your needs. Our services include, invoice Discounting both confidential and disclosed and Invoice Financing.


21

Value Drivers

Step 1 – Understanding the Value DriversWe believe that you cannot maximise the value of a business without fully understanding it and its owners objectives. That is why the first step is designed to get straightinto the detail of what makes it tick and what is its potential for the future.

In-depth MeetingA Corporate Director or Regional Manager will meet with you to discuss your objectives and to provide a financial appraisal of the business. The initial meeting will allow us to:

Understand your objectives:Knowing what is most important to you will help the transaction process. As well as the best price, you will need to consider other factors including:• Do you want a complete break or some ongoing involvement?• How important is a good home for your business?• How quickly do you want to sell?

Information gathering An understanding of how your business is operated will allow us to recognise the key drivers of value within your business and how we can actively sell them to potentialpurchasers.

Understanding Strengths and Weaknesses‘Honesty is the best policy’. If we know your problems and concerns for the business, we can address these and ensure they do not impact on value.

ConfidentialityWe understand that some facts and figures on your business may be highly confidential and therefore we manage the dissemination of information to purchasers, leaving sensitiveaspects to later in the transaction. For further security we will not approach anyone that you have not agreed to, and any purchaser who requests a copy of the InformationMemorandum will have to first sign a confidentiality agreement.

The 6 Steps in Detail


2 2Presenting The Opportunity

Step 2 – Presenting the Opportunity‘First impressions count’. This is as true for a potential buyer as for any other situation. That is why we make sure that the details are right, in both written and face-to-face communications.

Information memorandumWe will prepare an Information memorandum. A professionally written and presented document containing sufficient information to sell the opportunity and allow buyers toformulate their interest in your business. It will contain a summary of the following (where applicable)

• Overview of the business activities• Future growth opportunities• Competitive advantages and differentiating factors• Financial profile (both historic and projected)• Company structure and ownership• Sales and marketing information• Management skills and achievements• Staff structure• Associations and accreditations• Property and premises details


2 3

Buyer Intelligence and Marketing

Step 3 – Buyer Intelligence and MarketingOur job is to seek out special purchasers, those for whom the acquisition of your business would provide a synergistic or strategic benefit. We look beyond the obvious(your direct competitors) to complementary markets, international and overseas players, and also financial purchasers to maximise the chances of multiple offers. Ourstrategy is targeted but diverse, in that we only talk to potential buyers who should have a genuine interest in acquiring your business.

Detailed ResearchIn our meeting with you, and subsequently, we will brainstorm where the most likely purchasers may come from. Our Buyer Intelligence team draws on both its existing knowledgeand extensive research capabilities to investigate these targets in detail, creating a profile of buyers, their motivations, financial strength and appetite for acquisition. Our researchencapsulates:

• Market activity and recent transactions in related sectors

• Detailed sector research including competitors, suppliers, customers, related products and markets

• Detailed company research

• Sector news and current issues

Professional ContactsWe have a large and diverse contact database, which we will farm to generate further market intelligence to support or challenge our own understanding as well as providingadditional routes to potential buyers.

Initial ContactYour deal executive will make contact with all potential buyers and the Opportunity Summary will be used to assess their level of interest. This weeds out any time wasters andfocuses attention on genuinely interested parties.

Marketing and advertising campaignWe will discuss, agree and implement a focused campaign of both online and offline advertising in order to maximise the interest in your business. We will place your businesson selected websites and in relevant publications in order to target the opportunistic buyer. (Where applicable)


24Buyer Meetings and Offers

Step 4 – Buyer Meetings and OffersWe will employ a range of strategies and techniques to ensure that the bidders make the best offer possible. We will discuss tactics with you appropriate for eachcircumstance, but will include a combination of the following:

It is important to prepare thoroughly for all meetings. We will discuss with you how to get the right messages across and how to control the meetings. Key considerations foreach meeting include:

• The motives of the buyer for the acquisition • Where to meet – venue preparation (especially if on site)

• Developing trust and rapport • When should you discuss (or not discuss) value

• How to focus on promoting the business, • What do you want to know about the purchasers intentionsappropriate to the type of purchaser ( e.g with management, relocating , etc.)

Fixing the TimetableBy being clear with what is expected and by when, we are able to retain control over the process and take power away from the buyer. It also means that the deal is run at thepace of the quickest and most attentive buyer not the slowest, injecting a sense of urgency and competition.

Competitive TensionIt is unlikely that bidders will ever know how many other bids exist or the extent of the other bids, as our 6 step Sales Process is designed to create a competitive situation.

Detailed BidsPrescriptive bidding details will be requested, outlining other bid criteria as well as price. These will include:

• Detailed structure of the deal • Stance on key legal issues (e.g. warranties)

• How the deal will be funded • Intentions for the business (e.g. will it be relocated, will staff be retained?)

• What approvals are required • Role for the vendors, status, remuneration, etc

This approach facilitates comparison of offers and allows each key point to be negotiated separately.

Information FlowRather than issue further information en masse, it is given out in small chunks and in return for information from the buyer. This helps us to build a better picture of the buyer’sreal intentions, and the benefits of the deal. More knowledge means a better prepared negotiation.


2 5

Bidder Selection

Step 5 – Bidder SelectionIt is highly unlikely that all offers will look exactly the same and therefore effective comparison is not straight forward. We will help you to understand the differencesbetween the offers and the potential impact of choosing one party over another. Factors may include:

Overall PriceThe most emotive factor, but often the highest price is not the best offer for you and achieving your objectives.

Deal StructureHow does the deal structure impact on you now and in the future:

• How much cash day one? • What is the nature of any deferred payments – (e.g. are they secured and if so how)?

• Are there retention accounts? • Is future consideration fixed or dependent on future performance?

• Is there an upside for over-performance? • What are the tax consequences?

Ongoing InvolvementAre you required to stay in the business and if so, in what capacity and for how long? Are you to be remunerated?

TimescalesHow quickly can each party complete and what level of due diligence is required? Who are their advisors and lawyers and do they need additional approvals?

IntentionsDo the buyer’s plans for the business accord with your own wishes – how might this impact on the future for your staff?

EmpathyCould you work with the buyer post transaction, and what impact may this have on any deferred or contingent consideration?

DeliverabilityOne deal that looks better on paper may not be as deliverable as another (e.g. may need to raise external finance). This is possibly the most important factor in choosing the buyer.

LegalsWe can help with the appointment of a corporate lawyer to draft the legal documents on your behalf, as well as assessing, explaining and helping with negotiations on anycommercial points.


2 6Com

pletion

Step 6 – CompletionA deal is now agreed in principle and the buyer will usually be afforded a period of exclusivity to undertake the necessary validation of the business as presented tothem, and to complete the legal agreements. This process is likely to take a number of weeks, but if managed effectively it can be relatively straightforward. We do thisin a number of ways:

Project ManagementThere are a number of parties with differing objectives to the transaction; we set out a clear timetable and completion plan that everyone is advised of, and monitor and drivethe delivery of milestones against this timetable. This fosters ownership and accountability of the delivery of the milestones. Such parties include:

• You • The buyer’s financial advisors

• The buyer • At least two sets of lawyers

• Due diligence providers • Any of your staff who need to be brought into the loop to facilitate completion (e.g. Financial Controller)

Due DiligenceWe help you to produce any information requested by the buyer’s accountants, and ensure that it is presented in a consistent and constructive way, as we understand how theprocess works and the drivers behind such requests.

Managing BottlenecksIn almost all deals, issues arise that are not core to the business but which need resolving (e.g. property, insurance, IT issues). Our experience enables us to resolve these asquickly as possible and maintain momentum.

Act as a BufferThe process can be a stressful and emotional rollercoaster for both buyer and seller and tempers can become frayed, potentially damaging relationships. We can act as a bufferto keep things on an even keel and help raise issues in a constructive and impartial way.


27

Regional Contacts

North West: 01204 465888��

North East: 0191 230 5333��

Yorkshire: 0113 250 5050��

Midlands: 0121 422 0222��

South West: 0117 922 0777��

London/South East:�0207 584 5841��

Wales: 01978 266655�

Scotland: 0131 228 8777��

East Anglia: 01603 424252�

Additional Information


This guide outlines the basic process that we follow when we are instructed by a business owner to selltheir business.

We are certain that you will have additional questions relating specifically to your business. As we areexperienced in a wide range of sectors we would be happy to discuss your circumstances in a morepersonal, yet confidential and obligation free manner.

Please use your regional contact numbers to speak to an experienced advisor:

You can visit our website for more information on the benefits of instructing KBS Corporate to sell yourbusiness. Here you can sign up to our regular newsletter which identifies recent sales, sector news andmuch more.


KNIGHTSBRIDGE HOUSE

FOLDS POINT

FOLDS ROAD

BOLTON

BL1 2RZ

TEL: 01204 465 888

FAX: 01204 465 999

Documents

6 Step Guide