Selling Your Business: 10 Questions

A lifetime’s work. A once in a lifetime transaction.

Many business owners spend decades building a business, focused on what’s happening operationally and little time on the strategic direction or planning for optimising the future sale value of the business.

At Lumina, we exist to support business owners through the entire process of planning, positioning and grooming their businesses for sale, and the eventual exit to optimize value.

We have identified the top 10 questions that business owners have asked us over the years, when contemplating selling their businesses.

The few minutes you spend reading the answers, could start you on your way to planning and executing a successful transaction.

1. How much is my business worth?

When establishing a value for your business, we assess a number of factors including earnings track record and forecasts, underlying asset values, industry dynamics, and special value considerations.

We work with you to understand the potential valuation methodologies that buyers are likely to use to evaluate your business, and use our experience and knowledge of recent relevant deals to give you a good and reliable indication of how much your business is worth before you make a commitment to sell.

2. When is a good time to sell my business?

As with any business deal, timing is vital. At Lumina, we give you an objective assessment of your business, the industry sector in which you operate, and the general economic environment as a backdrop to an opinion as to whether or not it is a good time to sell.

Some circumstances clearly make it easier to sell a business regardless of timing – for example if you operate in a consolidating industry, are a good-sized participant in that industry and have an exceptional customer base.

Almost, and without exception, a good quality business will always sell. But if we think the timing is wrong, then we’ll tell you so.

3. How long does the sale process take?

Typically selling your business will take four to six months. However, there is no formula to predict how long it will take, and it will depend on many factors including the type of sale process that is run, the number of buyers that you enter into serious discussions with, the transaction structure of the deal and the complexity of the legal documentation necessary to complete the sale.

Once we have had an opportunity to discuss your personal objectives and have appraised the key business issues, we will be in a position to give you a frank assessment of the likely timescales involved.

At Lumina, we advise you through the entire process from the very start all the way to the completion of the deal and are often asked by our clients to advise on the next steps post-sale.

4. Can I sell the business in a discreet manner?

For most businesses, knowledge of the sale can be damaging. Potentially providing a commercial advantage to a competitor, and unsettling and disruptive for suppliers, customers and employees.

At Lumina we manage a fully confidential process, which seeks to limit the number of parties with knowledge of the potential sale and ensure that third parties sign confidentiality undertakings. However, we also recommend that a communications plan be put in place to deal with all eventualities.

5. How do I find a buyer?

We use our combined industry knowledge and contacts to identify companies with both the financial capacity and the strategic rationale for acquiring your business, in order to create an appropriate short-list of potential buyers to approach.

As part of every sale process, we will also consider with you the merits of approaching private equity buyers, who continue to be highly active in acquiring private companies with good growth potential.

6. What is the sale process?

At Lumina we have a clear, proven process when advising on a sale:

Plan
We work with you to interpret the demands of the scenario(s) and expected outcomes.

Model
Our team formulate the financial models and create the supporting documentation including a detailed information memorandum and transaction structure which highlights the opportunity.

Market
We take the opportunity to market, creating a shortlist of interested parties that fit the outlined criteria.

Close
Our work is done when the deal is done. We manage the process from end-to-end adding value to your business at every step of the journey.

7. What information will a potential buyer need?

As part of our role in managing the sale process we control the release of commercial and financial information to potential buyers. Providing enough information for them to confirm their interest and initial bid for the company or business, and more detailed information, including any highly sensitive information, at a later stage once a deal is agreed in principle.

Great care is needed in preparing 
a compiling an accurate information memorandum. Exactly what information to include and the best way to present it is very important. Too little or too much information or the wrong emphasis in the wrong place can have significant adverse consequences for the process

8. How will my employees be affected?

Like most owners, you will probably feel very responsible for your employees during the sale and after the business has been sold. However, once you have sold the business the new owner becomes responsible for them. Agreeing on appropriate provisions to safeguard your employees’ interests, will be key to a smooth transition and the optimization of value for all parties.

One of the best ways to ensure a satisfactory outcome for your employees is to make sure that the business goes to the ‘right home’. Our assessment of prospective purchasers will help you make a judgment on this issue. Additionally, keeping a structured, open dialogue with your team is critical in gaining their trust and support through the entire sale process.

9. What will my role be post-sale?

Your position after the sale will depend on your own wishes and the requirements of the buyer. It is not unusual to have a hand-over period or an “earn-out” period, but the duration and nature of the arrangement can vary enormously.

If you have clear views on what you would like to do post sale, these can be incorporated in to discussion with potential buyers at an early stage.

10. What are the main risks associated with selling my business?

The principal risk in selling your business is to sell it too cheaply. Often as 
a consequence of reacting to an unexpected approach from a third party. Our involvement will ensure that you make informed decisions and professionally manage any sale process to your full advantage.

Another risk is committing unnecessary time and expense if a sale does not complete for whatever reason, and losing focus on the day to day operations during the process.

By working with Lumina and our proven process, we allow our clients to focus on keep their business functioning in the best possible shape, while getting the best possible value at the same time.

We put you in control at all times, and can put the sale on hold if your situation or outlook changes.

Are you ready to sell your business?

If you’re looking to realize the value you have created in your business, now is the time to talk to us. Our outstanding track record in advising owners and our proven process is designed to optimize the significant value you have worked so hard to create over the years.

To arrange a confidential discussion to explore your options, contact George Traub or call him on +971 55 491 6442.