Planning your Business Exit Strategy

Perhaps you are one of the South African entrepreneurs who have opted to build a company and now wish to sell it. Be aware; there can be a vast difference between achieving an acceptable cash return from your investment and negotiating a business exit strategy that will provide for your every need. For a start, why settle for “acceptable” when there is every chance you could do a lot better? Secondly, the process is more complex and will take correspondingly longer than selling a house.

It may be tempting to entrust the sale to a business broker. However, should you do so, you could be making a costly mistake. A broker will generally begin by negotiating a pre-agreed percentage of the sale price as a commission. The broker’s services will then be divided between your interests and each potential buyer’s needs to obtain a compromise acceptable to all. In other words, there is every chance the buyer’s needs could take precedence over your own if that’s what it takes to secure a deal. By contrast, negotiating a successful business exit strategy calls for more than stumbling across a willing buyer. It will require the unique skills of a mergers and acquisitions (M&A) firm to realise your price and secure your personal goals.

Contrary to popular belief, mergers are not all between giant corporates, and neither are they the organisations most often scouting for acquisitions. One of the greatest strengths of the M&A advisor lies in knowing where to look to find serious buyers for your type of business. Meanwhile, let’s examine the benefits of retaining a sell-side M&A advisor to plan your business exit strategy.

In practice, the expression “sell-side” highlights one of the main benefits of choosing this route to sell your business. You can rest assured that your advisor will have only your interests at heart and will not compromise your needs. Furthermore, the M&A specialist will examine your desired goals and the underlying reasons for your sale to ensure developing the most appropriate business exit strategy to satisfy your specified requirements.  

Having established your requirements, the firm will launch a marketing campaign to attract and select several buyers recognised as being keen to purchase or merge with companies in your particular sector. In preparing for the deal, your advisor will identify any tasks you will need to complete, such as preparing an updated balance sheet, settling any outstanding disputes with staff or suppliers, and providing professional support as necessary.

Furthermore, the firm will handle the intense upfront preparations and all negotiations when finalising your business exit strategy. If you only required a straight sale, the firm’s task is complete when signatures are exchanged, and payment is made. If your goal is to expand through a merger and retain a managerial role or to stand down and share in the profits, that task could extend for years following an agreement.

Deal Leaders International is a firm that extends its comprehensive market knowledge, financial expertise and negotiating skills to privately-owned companies, pairing them with reputable, interested local and international buyers. With sales close to R1 billion in the past six months alone, DLI’s ability to negotiate your business exit strategy is beyond question. 

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