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Selling a business is a rather complex process that a typical businessman encounters very rarely. The complexity of the company's sales stems from the fact that it requires specific knowledge and experience of conducting similar transactions. Due to the uniqueness of the individual companies and the situation in which they are located, there is no single universal way to sell a business. However, it can be inspired by the best practice and proven practices that have been used in market conditions for years.
The standard and most common way of selling large and medium-sized private companies is a private tender.
1. Preparation of sales
Your business owner should be ready for sale in good time. He should have an idea of the value of his company, the potential risks, and if he is not the only owner, this intention should be discussed in advance with co-owners. It will also help if the buyer looks for the sales of the company and identifies weaknesses (for example, litigation, bad debts, sole buyer, or strong buyer and supplier bindings on the current owner or management, etc.). At this stage, an external consultant can help, who performs due diligence and business valuation, and suggest ways to eliminate weaknesses and risks.
2. Preparing the Target Leaf and Teaser
The owner together with the consultant will prepare the so- "Target list" or "long list", which is a list of prospective buyers and intermediaries (provided that the owner does not register the preferred preferred bidder). Those interested may be direct and indirect competitors, subscribers and suppliers who might be interested in integrating vertical, consulting, foreign companies with an interest in entering a given market, and so on.
At the same time, the consultant together with the owner will also prepare the so- "Teaser" short 1-2 business information (subject of activity, basic financial indicators, etc.), that is, in principle, information that should attract buyers' attention. Subsequently, this teaser will share with companies and individuals listed on the long list, also with the stated expression of interest. If necessary, he or she can phone their teaser interest by phone.
3. Expression of interest and signature Confidentiality agreement / Non Disclosure Agreement
Based on the written interest of buyers and advisors, the relevant bidders will be selected, short list. These bidders are required to sign the Confidentiality Agreement or the NDA, which is, in fact, a contract for the protection of confidential information. By this contract, which is a standard document, the vendor protects against misuse of information in a competitive fight.
4. Preparation of an Information Memorandum
Then the consultant prepares the so- An information memorandum that, unlike a teaser, is a comprehensive document with detailed company information ranging from several to several hundred pages. This document will be distributed to those who have signed the Confidentiality agreement or the NDA.
In some cases, this step may be omitted because of time savings. It is used especially in cases where there are large companies with foreign buyers.
5. Preparation of dataroom
Again, together with the consultant, the owner will prepare the dataroom index and the dataroom itself, which can be the physical room where all the essential documents and information about the company (accounting books and statements, tax returns, contracts with suppliers and suppliers, etc.) are stored. some data blackened. Dataroom can also be electronic and the information is scanned and stored on a dedicated password-protected website.
6. Making Managerial Presentations
The next step is the management presentations. At individual individual meetings with stakeholders, company management will present the company, its history, its functioning, development potential and plans for the future. This is, in particular, a summary of the state of society from a strategic point of view. The presentation also includes space for questions. Both sides examine whether they are mutually compatible and, to a certain extent, mutual sympathy is also important.
7. Letter of Intent
After the management presentations and on the basis of the submitted Information Memorandum, the interested parties will submit a so-called " Letter of Intent in which they specify the price (or interval) they are willing to pay and the specific conditions under which they are willing to take over.
8. Conduct due diligence by the buyer
At this stage, the candidate / his advisor will perform detailed business analysis, especially in the areas of law, taxes, finance, on the basis of information and documents in the dataroom, to show the company's strengths and weaknesses and the risks associated with its takeover. Due Diligence is an important tool for setting the purchase price and formulating contractual guarantees.
9. Submission of bids (term sheet)
Buyers submit binding bids after thoroughly analyzing the documentation obtained through the due diligence process. The consultant will evaluate the owner
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