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How long to get all your cash when selling your business?
Posted on 01 Aug 2022, by admin
The “Seven-year problem”
Proposed timelines we are seeing from buyers of owner managed businesses.
Preparation: 1 year
The problem
- Preparation is often talked about but rarely are value-added actions undertaken.
- Prospective buyers see through “Quick fixes”.
- Buyers like a constant historical sales and profit trend of at least the last 3 years.
- If this is not available, it can delay the business preparation even longer.
The Solution
- Dexterity Partners key differentiators are our Fit to Sell and Fit for the Future hands-on tailored business analysis.
- Too often “opinions not facts”, we focus on commercial sustainability and measurable KPI’s.
Sales process: 1 year
The problem
- Process requires several stages preparation, buyer identification, marketing, offer verification negotiation, due diligence and legal agreement.
- The traditional approach uses multiple brokers your accountants, sales agents, corporate finance and lawyers.
- None of whom own the end to end process.
The Solution
- Dexterity Partners project manages via one point of contact, taking ownership of all stages via our own Fit to Sell team, researchers marketing and advisory teams working closely with the legal team and any other advisors to produce a fully integrated sales process
Earnout: 3-4 years
The problem
- Earnout commitment often overlooked by own businesses dependent on the owner or providing services rather than products
- This ties in owners to the future creating uncertainty over total value
The solution
- This can be reduced via our Fit for the Future analysis
- It provides evidence, not hope, that existing performance will be maintained
Consideration as shares: 2 years
The problem
- When selling to a corporate the consideration often includes their own shares
- Requirement to hold for 1 2 3 years
- The shares may increase or decrease, and you, the buyer, does not have the actual cash
The solution
- Address early in any negotiations
- Included in any Heads of Terms
- Avoid incurring due diligence costs by agreeing any period of been unable to trade the shares
Summary
- Dexterity Partners can significantly reduce this timeline without destroying value
- We invest in you today to build value for an exit tomorrow
- Our unique approach significantly shortens the timeline to realise cash
- If you are looking to sell it is beneficial to consider the above problems now
- If you would like a free assessment of your business, please contact us
