‘Growing and Selling Your Business’ in the vibrant Thames Valley

An informative seminar by dealmakers BCMS, hosted by lawyers Harrison Clark Rickerbys. John Burbedge reports.

With 127,000 thriving Thames Valley businesses contributing £74 billion GVA to the national economy and a current positive buoyant mood, the region is ‘a hotbed for dealmaking’ this breakfast seminar at Reading’s Green Park was told.

Unsurprisingly, attendees were keen to learn the experts’ hints and tips. Selling was the key discussion topic. Questions from the floor included how to establish a realistic business valuation; gaining suitable prospective buyers; management buyouts; private-equity investment; immediate sale risks, retaining shares and earn-out deals; tax implications; the time, costs and stresses within deals; and, how to keep negotiations under wraps.

Having gone through successful sales processes led by BCMS, Jon Neill and Marc Noel had high praise for their dealmaker and the skilled professionals it brought to the process. “They became very much our team, helping with financial, marketing and legal matters,” said Neill.

Both highlighted the need to gain professional assistance – “running your core business while trying to sell the company can be difficult and stressful”.

And, prepare well for sale, well in advance, urged Noel highlighting his many meetings with BCMS helping to position his company correctly for sale – an extra workload that often can’t be shared with staff.

Rebecca Leask of Harrison Clark Rickerbys concurred on BCMS’s beneficial behind-the-scenes help and advised ‘a little and often’ progress on preparation rather than face being ‘run over by a bus’. She noted that due diligence work, very important within today’s complex deals, is often a more complex task than clients imagine.

Sellers tend to value their businesses incorrectly as going concerns, BCMS’ Duncan Wade added. Buyers usually view a business including its potential strategic value. Enterprise valuations (EV) are generally assessed on EBITDA multiples.

With EV generally in single-figure EBITDA multiples, Murray revealed that some Thames Valley deals achieve double-digit multiples. 

The BCMS process, Wade explained, was always aimed at maximising value for the seller, by gaining wide-ranging interest, then evaluating that interest to generate a small competitive group of quality potential buyers.

Neill had imagined his business would be bought by a UK concern, but BCMS also identified international interest. Sportsafe eventually sold to a French company.

While enough money to secure the seller’s future was a key upfront objective, cash was not always the driver, the panel advised.  A continuing involvement, a shareholding, a property, staff wellbeing, even a simpler uncomplicated transaction might sway a deal.

‘One key piece of advice’

Murray: “Start the process early, plan well ahead.”

Wade highlighted determining the desired end objective, while being realistic and prepared to consider process options.

Both Leask and Neill advised establishing a trustworthy ‘deal-team’ of proven professional advisers with whom sellers feel comfortable to work with closely over several months.

Noel: “Get your business in good order; make sure there are no skeletons in the cupboard to scupper the process.”

A very confident Thames Valley

Adding to BCMS research from their nationwide seminars, views were gained from attendees through data-capture keypads.

• A combined 90% felt ‘confident’ or ‘very confident’ of UK economic growth over the coming year.
• Following the Brexit Article 50 signing, a combined 95% felt their own companies would continue to grow – strongly (39%) or with unspectacular growth (56%).
• Beneficial lifestyle change (47%) and retirement (20%) were the key objectives for sale or succession.