Preparation of company divestiture
‘Value creation’ is the buzzword often used while preparing the sale of a business. Our vision is that the main reason for preparing the sale of a business thoroughly, is to increase the feasibility of that sale. Possibly less popular, but definitely realistic and necessary.
Currently we see a buyer’s market: the supply of companies for sale exceeds demand. This means that buyers can choose carefully. Buyers, both strategic and financial, are picky nowadays. They themselves are well aware of all the risks associated with an acquisition, mostly through (due diligence) investigation. Therefore, they try to avoid the contractual risks as much as possible.
As a result, the sales process is not always successful. But, that does not mean that picky buyers are to blame. In many M&A processes, the companies offered are not ready for selling. The results fell short of projections, necessary investments have not been performed yet, or the management is not at full strength. Timely and thorough preparation are key for maximising the feasibility and profit of a transaction.
In our view, preparation requires careful analysis of a company. Not only the strengths, but also the risks, opportunities, and limitations. By using this analysis, we can indicate how risks can be reduced, for example by strengthening management, or acquiring a broader range of customers and suppliers.
Simultaneously, we can work out the next steps in the divestiture process, with an assessment of prospective buyers, researching if a tender procedure is viable, and analysing what information could strengthen the bargaining position.
This thorough preparation will result in a faster and better final transaction process, which will immediately earn back its required investment.