Aritz Laso, Associate
Selling a company is one of the biggest challenges faced by any entrepreneur throughout their career both professionally and emotionally mainly because it is a unique process that difters from the usual knowledge of any manager or owner. It is usually a long process , difficult to combine with the company´s day to day management.
Therefore, many business owners decide to retain the services of specialized advisors such as IMAP Albia Capital.
But what does an entrepreneur expect when he contacts us? What are the main challenges faced in the sale of a company process? How does this process impact business? These are some of the questions that many of our customers ask us during our initial conversations, and which we will try to answer below, highlighting the main milestones in the process of selling a company.
- Reflection and Planning
Often when we are asked about the desire to sell the company, the owner already has a general idea of what the process entails, but without specific knowledge about the possible valuation and price, transaction structures, possible candidates, execution of the process etc.
Our goal is to convey what a sales process entails and understand the company and the interests of the owner, which will lead us to propose alternatives of transaction structures that maximize the value for the shareholder and meet their expectations, in addition to being able to solve any type of question about such a process.
It is understandable that the entrepreneur does not know all the particularities . From IMAP Albia Capital we aim to be able to provide as much clarity and confidence as possible in this first meeting.
The Entrepreneur has one of the most important decisions of his business career, and usually does not have a deep knowledge about all phases of the process.
If finally, the owner decides to carry out a sales process, a mandate will be signed, detailing the criteria of the services offered by IMAP Albia Capital.
In addition, once the engagement is in place , Albia will dig deeper into the aspects above mentioned, as well as into the valuation of the company, which will allow us to carry out an adequate planning of the sales process in order to have as much control as possible of the different factors of a process, which as you can see, are many and very different.
Once we have defined the main aspects of the process, a list of information will be requested.
- Documentation and knowledge of the company
With the information provided by the company, the objective will be to know it as thoroughly as possible. Strengths and weaknesses, levers of value, and interest to a potential buyer, etc. The priority is to try to get as much knowledge of the company as possible.
A period of intense interaction between the client and the advisor begins, and our goal will always be to generate that trust that will lead us to success in the sale of the company.
This internal work will end with the completion of an Information Memorandum (document detailing the main virtues of the company) and a teaser (short document that, without mentioning the company´s identity, summarizes its main characteristics and serves as a presentation in an initial contact with potential candidates)
Once this Internal work is done, it’s time to go on the market.
- Promotion and selection of candidates
Going to the market always creates substantial uncertainty for company owners. There are many questions , and the only answer is the market, but we feel the responsibility, to put selet the most adequate candidates with the greatest strategic fit.
At this stage of the process it is essential to have an international advisor and a large number of contacts, which allows to identify the right candidates and have inmediate access to them.
Another of the main aspects that concern our customers is the confidentiality of the process, especially when carrying out the go to market of the same. Therefore, the candidates to be contacted and prioritized are agreed, so that feedback is obtained from each of the contacts, and that the sales process can be redirected if necessary.
Once the selection of potential candidates has been made, approach and offering will take place.
Candidates who show the greatest interest in the possible transaction will receive the Infomemo (after the signing of a Confidentiality Agreement, in which the interests of the client are protected) and quite possibly from the first analysis may ask some questions about the transaction.
The communication between the client and the advisor at this stage is another relevant aspect, since the client will be constantly updated about the state of interest of each of the candidates, as well as require some assistance when solving different questions about the company that may arise.
And finally, interested candidates will have to issue an Indicative Offer, with the conditions and indicative price to acquire the company
- Receiving Offers and Negotiations
Following the go-to market stage, the different Indicative Offers arrive, from which those that meet the expectations of the owner will be selected. There is usually a negotiation between the parties, which leads to an improvement in the conditions and the decision of which option to choose.
Different presentations will be made between the client and the candidates, visit to the facilities, request for certain additional information etc. Another important stage begins, generating an environment of trust between the potential buyer and the seller,a vital aspect for the success of the operation. It is therefore necessary to have an expert Advisor to help generate that trusted environment, and to be able to manage situations of tension between the parties, which always appear during negotiatios between parties.
From IMAP Albia Capital we will coordinate all these efforts, with the aim of having a Non-Binding Offer by each of the candidates and selecting the most favorable to the interests of our client.
- Due Diligence
Once a Non-Binding Offer is accepted, a period of exclusivity is opened to begin the Due Diligence phase or reaffirmation by the buyer that the situation and information of the company is accurate. This is one of the phases that requires a meaningful most effort from the client and the advisor since the information to be provided requires great detail of internal knowledge.
With the result of due diligence, one last negotiation is faced, taking into account possible incidents that have been observed.
The greater the trust generated between the buyer and the seller in the previous phase, the greater the flexibility of both to address the different aspects that may appear at this stage and that have an impact on value.
- Contracts and Closure
Once an agreement has been reached, it is time to close the transaction with a Contract (SPA), which is a legal document detailing all the aspects and the conditions under which the sale will take place.
And with the contract agreed, comes the signing and the subsequent closing of the transaction.
In summary, to achieve the goal of selling the company, it is vital to have an expert advisor who conveys trust, controls the process and knows how to highlight the value of the company, select the entire candidates and negotiate the whole process to obtain the best conditions. In this way the seller owner will be certain to have completed the best transaction.