A very sound sale

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Blood, sweat and tears

Have I ever mentioned I love what I do? Maybe once or twice!

It’s a privilege to support brilliant, passionate entrepreneurs, coaching, advising and mentoring them through the multitude of challenges of running your own business.

For many entrepreneurs, there comes a time when they’re ready to move on and enjoy their retirement.

At this point, the focus is usually twofold: achieving the highest possible value for their business, and finding the most appropriate new home for their ‘baby’.

A just reward for the blood, sweat and tears they’ve devoted to their company over what’s usually many years, sometimes decades.

A nest egg to provide a comfortable, more relaxed future.

But, selling a business is a rare event in most founders’ business journey. One that can be daunting, emotional, and fraught with risk.

How they navigate the process can make a dramatic difference to the outcome for all concerned.

Out of the blue

In early 2022, I got a call from Dave Haydon. Many years ago he’d been a highly-valued? member of the team at one of the businesses I was involved in. We hadn’t spoken for over 20 years, but we’d always enjoyed an excellent working relationship.

He said that he and his business partner, Robin Whittaker, who I’d known previously, and who I had huge respect for his technical prowess,? were ready for retirement after co-founding and successfully running their company, OutBoard Electronics, for 25 years.?

Dave asked if I could help them prepare their business ready for sale, and ideally support them all the way through to completion.

Knowing how much impact an experienced Mergers and Acquisitions (M&A) adviser can have on a business exit process and outcome,? I didn’t hesitate to say yes. Actually, I felt honoured to be asked.

OutBoard Electronics (OBE)?

To their immense credit, Dave and Robin had built up OBE to be a pioneering, internationally acclaimed, multi award-winning world leader in spatial audio for live performance, entertainment and events. You’ll have experienced and enjoyed their products without knowing they were theirs!

Their business strategy has always been to keep fixed costs low, so they made it a policy to work with the best freelancers in their field instead of building an in-house team.

It worked! They successfully built up a flourishing, multi-million-pound business.

On your marks

Dave and Robin had a clear goal in mind — they were ready to enjoy their retirement while still fit and healthy, and they wanted the sale to be completed by the end of 2023.

We got to work.

I led them through my process, and we agreed deadlines for each stage and key milestones.

They were both fully committed to the work; they dedicated time away from the day-to-day running of the business to get everything done.

Get set

We identified and researched six potential buyers. There was a clear front runner, and we focused our attention on that company, while keeping the others warm. We also created ‘Plan B’: Because OBE has two distinct but related revenue streams, we were prepared to split OBE into two separate companies and sell them separately, if that created better value for them.

Go

Equipped with a strong equity storyboard*, a credible valuation, and a buyer’s mindset, Dave and Robin confidently presented their business to the front runner.

The presentation and subsequent discussions went well. I helped them negotiate the structure and financial terms and the Heads of Agreement, followed by support through the exclusivity period, and finally the detailed Due Diligence process (the buyer is a PLC), towards a successful outcome. I also introduced appropriate legal and accounting resources to them (it’s my strict policy never to accept finder’s fees).??

We did it?

The final stage of selling a business at this level is intense. Short-notice meetings requiring existing schedules to be shuffled. Late night finishes. Hours spent poring over the minutiae of every aspect with the lawyers and accountants.

In order to minimise the chances of last-minute hitches (want to see my scars?!) Dave and Robin worked hard to clean up and polish every aspect of their business, ready for the negotiations and Due Diligence process.

When everyone was happy and the mountain of paperwork was finally signed, the adrenaline and euphoria were off the scale.

Completion took place just before Christmas 2023, and the champagne flowed!!

Reflections

It’s vital to know the figure you need to retire, taking the advice and using the calculations of an experienced wealth manager. This figure can then be translated, with the help of a tax adviser,? into the amount of money needed from the sale of your business.?

That’s where I come in: I calculate the business enterprise value needed to achieve that amount of money.? With private companies, that’s as much of an art as it is a science. For example, there have been many times when I’ve come across businesses with hidden assets, which the owners took for granted. I’ll write about valuing private companies in more detail in a future Blog.

The upshot of this approach is that I helped Dave and Robin achieve a much higher figure than they thought possible when they contacted me.

Most importantly, in my view, is this wasn’t a pie in the sky, inflated figure, it was robust and fully backed up.

It was an eye-opener for Dave and Robin when I introduced them to the concept of an equity storyboard*. It enabled them to convey OBE’s real value from a buyer’s perspective.

This approach also gives the prospective buyer confidence in how the business will not only continue to run successfully, but also grow substantially post acquisition.?

It wasn’t just a financial win for Dave and Robin. The new owners committed to invest and develop the business Dave and Robin had worked so hard to build; a key outcome for both sides.

Professionally speaking, I never feel more satisfaction and pride than when celebrating these pivotal, life-changing moments with clients.

I’d like to leave the last words to Dave and Robin:

“The game-changer for me was how you showed us the best way to develop our equity storyboard and insisted we do the work. That way we understood it, believed in it, and could confidently and authentically present it to the Board of our target buyer, a PLC, and its technical teams, and they used it to sell the acquisition to the stock market. It worked!” Dave Haydon

“Every aspect of our business sale exceeded my expectations. It has a great new home and we achieved an excellent value with a short earn out, completed within our timescale. This is all down to your M&A experience, process and coaching, and your motivation to make it happen for us. Thank you.” Robin Whittaker

If you’d like to discuss? your own exit strategy, get in touch . I’d love to help you realise the true value of your business.

*What’s an equity storyboard?

An equity storyboard is a visual and narrative representation of the historical and, most importantly, the potential future financial performance of a business, focusing on shareholder value. It includes charts, graphs, and other visual aids to illustrate key financial metrics over time.

Combining the analytical aspects of financial data with the persuasive elements of believable storytelling, an equity storyboard captivates the imagination and makes a convincing case for investment or acquisition.