Trends in buyouts v M&A
What type of company will appeal to buyers during a recession?

Preparing your company for sale in tough times

The M&A market is much better than it was.  Companies are selling.  But the recovery is fragile and its important to prepare well in order to maximise the value on sale of a company.

Three key things to do are put your house in order, accept "funny money"  and sell the growth plan.


This is always important - but especially so now.   Get your accounts squeaky clean.  And your balance sheet in order - i.e. not stressed.     Think about the impact of any investments on the level or surplus cash on sale - will you get better value by deferring them or funding them differently.    Also have a good clean track record, and if there are any ups and downs have them cleanly recorded so the buyer can easily understand what's gone on.

Funny Money

By this I simply mean that to get the best price you may have to accept defered consideration, earn out deals, or paper.   There's less liquidity about, and buyers with cash tend to want to hang on to as much of it as possible.  Deals are often done with between 33% and 50% seller financing.     This is not neccesarily a bad thing.  It depends how its structured.  And don't assume that earn outs are a bad thing - not everyone makes money from them, but I have advised on a number of company sales where the team have made most if not all of their earnout.

Growth Plan

In an uncertain environment you need to make the case why your company will prosper and even grow once it has changed hands.  You don't have to have implemented your plans - but it would be good to illustrate that you have tangible plans to increase profits.  For example if you plan to enter a new market, it would be good to have taken the first steps - you don't need to have set the world alight - but a buyer will rate you higher is you have proven your new idea has potential.



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