Updated: Sep 8, 2022
Bestar's team of experts will guide you through the divestiture, from developing an exit strategy to enhancing the value of the retained business.
After years of building a business, it's time to retire. This is the scenario faced by thousands of private company leaders in Asia. It's an exciting and often bittersweet experience - but long before it happens, you should be planning to exit your business and prepare for the eventual sale.
Whether helping clients realize value through business disposals, divesting non-core business units or exiting businesses facing financial stress/distress, we have a strong reputation in the market for leading and supporting sell-side transactions.
Our deal advisors are forward-thinking experts with broad skills and deep industry expertise to help you understand the potential risks and rewards of a disposal. We assess your situation and support your negotiating position to maximize the sale price and execute the transaction with minimal disruption to the remaining business operations.
By combining industry expertise, local market knowledge and an extensive global network, we excel at finding the right buyer who can deliver the best offer and complete the sales process - often in an accelerated timeframe. Customers can leverage our extensive experience in selling businesses and our accumulated industry contacts to quickly determine the best path to meet their specific needs.
Bestar assists in strategizing and coordinating the various stages of the sales process, such as estimating the company's potential value, identifying risks, contingencies and planning corrective actions, selecting potential investors, introducing the company and establishing a competitive sales process.
In some cases, selling minority stakes to financial investors is an alternative to leverage the company without giving up control and management, as well as allowing partners or heirs who do not want to stay in the company, to leave.
Steps to prepare your company for sale
- Understand the company's operations, strategy, financial condition and prospects;
- Analyze economic value ranges based on cash flow generation and market multiples to guide discussions with shareholders and their expectations;
- Provide supplier assistance - audit procedures in the areas of accounting, finance, tax, labor and environment to help the company prepare for investor questions on possible contingencies and also assess the need to suspend the sales process until some corrective action is taken, to avoid a reduction in the company's selling price;
- Prepare an informative memorandum containing key operational and financial information about the company, future plans and added value for each potential investor.
Execution of sales transaction
- Sign non-disclosure agreements and deliver informational memorandums to selected investors to evaluate opportunities and initial investment offers;
- Interact with potential investors to clear doubts, answer questions and respond to requests for more information;
- Negotiating the initial terms and conditions proposed by potential investors;
- Present offers to shareholders and select investors to continue the process;
- Assist shareholders and their legal advisors in reviewing and preparing Letter of Intent;
- Support shareholders in discussing the company's legal, tax, financial, labor, environmental and accounting due diligence results;
- Negotiation of final transaction terms, including financial and legal aspects that should be reflected in the contract;
- Assist shareholders and their legal advisors in transaction instrumentation, formalization and settlement process.
Owners should consider engaging an independent and experienced team of adviros to provide support before, during and after the sale. These individuals and their typical roles assisting sellers are as follows:
Establish a set of values and advice on the range of possible outcomes; identify challenges early in the sales cycle; develop selling stories and marketing strategies; "buy" the company to many potential buyers (so the seller has many parties to negotiate with); assist owners conduct valuations and negotiating strategies.
Assist in negotiating transaction terms; draft legal documents to close the transaction; focus on aspects that may pose a risk to the seller after the transaction; understand and assist in obtaining regulatory approvals.
Conduct pre-sale financial due diligence with a focus on earnings quality, normalized working capital and financial commitments (net debt). This sales due diligence can help reduce surprises in the transaction process, as well as potential price drops at the final stages of the transaction. These professionals also review data room documents for consistency and accuracy. After assessing value drivers, their focus often turns to commenting on transactional agreements; preparing cash flow statements, performing closing date balance sheet or working capital analyses; and assisting in determining purchase price adjustments.
Provide advice on the structure of the sale (e.g., receive a lump sum, stretch out the sale payments over several years, remain on the company payroll for a while as a consultant or advisor); determine the preferred domicile and type of legal/tax entity; obtain desired tax treatment of transaction (taxable or tax-free, where available).
Human resources professionals
Develop the organization’s talent strategy so that it is most favorable to the seller’s employees, including organizational design and integration under the new leadership; terms and conditions for retention of senior executives; separation agreements; rewards strategy and compensation packages; and employee communications plan.
Asset managers/ estate planners
Help seller assess whether the level of anticipated proceeds can achieve the owner’s hoped-for post-sale lifestyle and aspirations, given his or her appetite for investment risk.
How long does it take to sell a business?
Typically, the sales process takes 4 to 6 months. However, there is no given formula to predict how long it will take; some businesses sell in a matter of weeks and others take much
longer. Once your personal objectives are clearly defined and the key business issues identified, you should be able to gain a frank assessment of the time scales involved. Whatever the time frame, you can benefit from an adviser who will stay involved throughout, helping to enable you to continue running your business right up to completion, and ensuring that you realize the full value of the business.
How does the sales process work?
The sales process typically goes through a number of stages:
• Planning and preparation — preparing the business for sale, drafting an information memorandum about the business, researching potential purchasers.
• Marketing and negotiations — distributing the information memorandum, evaluating interest levels, receiving offers, negotiating and reaching an agreement in principle.
• Contracts and completion — contract drafting by lawyers, final tax restructuring, overseeing purchaser’s due diligence, completion of sale.
Preparing the business for the sale and pre-sale due diligence
• Discuss goals and objectives of management
• Develop understanding of the company’s business model, competitive position and corporate functions’ allocations
• Identify potential obstacles to sale and deal with them directly and upfront
• Analyze strategic rationale for various buyer/investor groups
• Develop understanding of union agreements
• Assist management in developing and diligence finances (historical and projected)
• Compile and review data room information
• Prepare detailed valuation analysis to assist buyer/ investor evaluations
• Create executive summary and prepare the confidential information memorandum
Marketing the business
• Finalize list of potential buyers/ investors and analysis of buyers/investors and analysis of buyer-specific synergies’ opportunities labor considerations
• Direct calling on potential buyers at C-suite level
• Distribute information memoranda to approved parties
• Develop management presentation
• Field injuries from interested parties to minimize disruption to the company
Buyer selection and due diligence
• Assist in evaluating letters of interest and qualifying buyers/investors
• Arrange value with management for qualified parties
• Facilitate flow of information to prospective buyers/investors
• Assist the company in soliciting and evaluating bids
• Evaluate price, structure, noncash consideration, potential synergies and conditions set by buyers/investors
• Evaluate buyers/investors’ financial capability to close transaction
• Assist where applicable in drafting labor business case and related documentation and begin negotiations
Closing the transaction
• Manage final due diligence process
• Assist in negotiation of definitive purchase and sale and other ancillary agreements
• Assist in structuring and closing the transaction
• Continue to assist in preparing information to be utilized in labor negotiations
• Ensure timely follow through and settlement of any post-closing obligations
How we can help?
While the decision to sell your business will be driven by your personal and financial objectives, it’s just plain logical to recognize that life and business are unpredictable and that events and opportunities may mean you find yourself pursuing a sale earlier than you had planned. Don’t sell yourself short. The investment you make in planning will be worthwhile and give you the peace of mind of knowing that you are able to respond to events quickly and from a position of strength.
We can help you:
• identify and prioritize potential buyers and determine a method of approach
• initiate confidential contact with prospective buyers to ascertain interest
• develop pricing analysis to help define expectations
• develop financial modelling to review the proposed transaction and the potential return
• draft required documents, including the offer, letter of intent, joint venture or strategic alliance proposal, and/or prepare the selling materials and the confidentiality agreement
• contact prospective purchasers, disseminate information, and coordinate the receipt and review of offers
• lead negotiations or provide negotiating assistance and support, including transaction structuring
• coordinate due diligence activities of clients, legal counsel, and other professionals
• supervise the transaction through to closing.
We can help you with the entire sales process, taking into account your ownership structures and strategic vision and balancing that with the needs of shareholders.
When it comes to selling a business, every decision counts. Our integrated team of specialists helps you make the right decisions throughout the sales process, combining deep sector knowledge and the foresight that comes from experience.
Securing the best value for a sale is a complex process that involves gaining a more objective view of your company and a more nuanced understanding of current market conditions, as well as defining the agendas of the buyers seated across from you. Bestar can support you through every phase of the lifecycle, from identifying potential buyers and creating a competitive bidding environment to helping enhance the value of your retained business.
To learn more about how Bestar can help you with M&A, please contact us. Get the help you need with any sale.
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