Dealmaking in a New Decade: Selling a business

As the M&A market shows encouraging signs of improvement, exit strategies are creeping back onto the corporate strategy and portfolio management agenda. When ‘cashing out’ of an investment, what are the most pertinent things to consider? How do you prepare for an exit, when is the right time and how do you set a valuation? I recently attended a mergermarket and Intralinks breakfast briefing at The Andaz Hotel in London to explore just this.


2 November 2010

As the M&A market shows encouraging signs of improvement, exit strategies are creeping back onto the corporate strategy and portfolio management agenda. When ‘cashing out’ of an investment, what are the most pertinent things to consider? How do you prepare for an exit, when is the right time and how do you set a valuation? I recently attended a mergermarket and Intralinks breakfast briefing at The Andaz Hotel in London to explore just this.

The seminar entitled ‘Dealmaking in a New Decade: Selling a Business’ was part of our recent series of breakfast briefings and the discussion focused on exit strategies. Over 70 senior M&A professionals from across the City gathered to listen to a panel of corporate and private equity practitioners share real life experiences and their expertise on how to make a swift, smooth and profitable exit.

The Andaz LondonThe Andaz, Liverpool Street, London

Catherine Ford, Managing Editor of Remark, mergermarket's market research and publications division chaired the panel which consisted of leading industry experts including Oliver Stacey, Corporate Finance Lawyer, Norton Rose LLP, Cyril Court, Managing Director, Equity Capital Markets, HSBC, Sean Whelan, Managing Director, ECI Partners LLP, Stewart Licudi, Head of European Financial Sponsors Coverage, William Blair International and Steve Beckett, Director, Corporate Strategy, BAE Systems.

Getting out of business is a process
From the discussion, it seems planning how you exit your business is just as important as how you start it. The goal is obviously to maximize the value of the business before selling it, making planning fundamental in improving the final result. Steve Beckett took the view of the more planning you can do in advance of triggering the sales process, the better. Therefore, a credible business plan must be implemented to ensure control is instilled to prepare for every eventuality. Oliver Stacey was in agreement commenting that all ‘skeletons in the closet’ need to be identified in advance so there are no barriers in the final stages.

Is it the right time to sell?
Timing is crucial when thinking about an exit. Sean Whelan stated that the time of an exit depends on if it’s the right time to get maximum value on your assets. Obviously, the global economy is often the most important timing factor in an exit but is the company actually in a saleable state? Throughout the entire process, professional expertise should be implemented to help answer these questions and to improve the outcome. Stewart Licudi commented there was a trend to appoint advisors as far as 18 months prior to the sale and many agreed that by assigning advisors in the initial phase is crucial to help with the success of the sale.

Valuations - setting and getting the right price
Steve Beckett stated a business is only worth what someone is prepared to pay for it. This is true but as a company it’s vital to know the market value of the business and its assets before you decide to exit. Cyril Court echoed this by saying that you need an element of realization in terms of what the price is of your assets and not only should your advisors estimate this figure but they must deliver it to you as well.

Overall, I found the discussion very informative. It provided an extremely helpful thought process for the audience and also gave me an excellent opportunity to catch up with our clients. If you are interested in attending our next M&A related event then please get in touch.