By The Asia Investor Pte. Ltd.

04/08/2015 Should I sell my business this year?

As the first quarter of 2015 draws to a close, it is turning out to be a busy year for M&A dealmakers. We had the first major deal of the year in Shire acquiring NPS Pharmaceuticals and closed the quarter with the high profile merger of Kraft and Heinz.

Closer to home in Asia, Barings Private Equity closed their latest fund in February, raising US$4bn. This adds to the total amount of unspent cash in the region of US$110bn as of the end of last year according to the Centre for Asia Private Equity Research Ltd. Alongside the recent trends of increasing outflow capital from China and investments in Southeast Asia, spurred by the upcoming ASEAN Economic Community, this may be an opportune time to sell your business.


What you should consider before selling your business

If you are thinking of selling your business, here are 4 things to consider:
1. Identify the right window to sell your business
It is important to plan ahead before selling your business. Many business owners only think about exiting their business when their business suffers a setback or is starting to decline. For the same reasons the business owner is looking to sell the business, investors will find it hard to pay an attractive price for a business that is trending downwards.
Selling your business when it is doing well is the best time to achieve an attractive valuation. Securing high value medium- to long-term contracts, an upward growth trajectory and a favourable industry outlook are all key investment features that will appeal to investors.
2. Make yourself expendable
Put in place a management team and delegate responsibilities such that you as the business owner are not irreplaceable in the company. Investors look for sustainable businesses that they can continue running profitably even after the departure of the former business owner.
3. Maintain confidentiality
Confidentiality is key in every M&A process. Rumours or news that the business is running a sale process could hurt the morale of your employees, cause unease among your clients and attract unnecessary attention of your competitors. Only the top management should be made known of a potential sale of the business and everyone else should only be told on a need-to-know basis.
Read more about the importance of confidentiality.
4. Prepare the business for a sale
Ensure that the accounts and financials accurately represent the profitability of the business. If there are any agreements with landlords, suppliers or customers that are currently done on an informal basis, it is advisable to formalise those relationships. To create additional value for your business, consider securing mid-long term contracts with your customers that will make your business appear more favourable to investors.
Investors will conduct their own due diligence on the business before purchasing the company and a well prepared business will help facilitate the due diligence process, increasing the chances of a successful deal.

The Asia Investor provides a sample information request list which is helpful in understanding what information buyers will look for in the due diligence phase.
How can The Asia Investor help? The Asia Investor is the M&A platform for SMEs looking to grow, finance or sell their businesses. The Asia Investor allows business owners and advisers to market their opportunity in a confidential manner to our growing network of investors. We have also designed our teaser to ensure that the most important pieces of information on the opportunity are highlighted. We believe that business owners should have the flexibility to run their own sale process and provide tools to help business owners and investors communicate securely, execute non-disclosure agreements and perform due diligence.

Learn more about how The Asia Investor and how we can help you.
https://www.theasiainvestor.com