Expert View
TRADE DEALS: BEWARE THE PITFALLS by Jenny Burke
Corporate partner Forbes
Trade sales come in all shapes and sizes but the pitfalls sellers face are commonplace:
Confidentiality
Before information is shared, you should consider whether the sale should be confidential. Is your business high profile? Does it have trade secrets?
How much of your business is already in the public domain? It is advisable for the parties to sign a confidentiality agreement before talks begin to ensure any information shared remains confidential.
Due Diligence
Due Diligence is a research exercise carried out by the buyer. It often takes the form of a comprehensive questionnaire which the buyer asks the seller to complete.
Often the due diligence exercise can be overwhelming. Start by eliminating irrelevant questions by answering ‘N/A’. Next, highlight any questions that have been answered in prior correspondence or is publicly available. Answer these by noting the location of the information.
For the remainder, we would suggest putting together a folder, in question order, which your answers and supporting documentation can be uploaded to. This will streamline the process when sending through to your advisers.
Asset Sale or Share Sale There are two methods to selling a business:
A Share Sale transfers the shares in the business to the buyer, with the buyer inheriting all assets and liabilities of the business. This is often the preferred method for sellers because of its simplicity and clean break effect.
An Asset Sale involves the buyer acquiring an agreed collection of assets and liabilities relating to the business. The parties can cherry pick which assets and liabilities transfer.
Both methods require thorough legal drafting and negotiation and it is important to chose the correct structure for your exit.
Both legal and accounting advice is invaluable when choosing the correct structure for your exit.
Steve Bell Corporate finance director
@pcaltd pierce-c.-a.-limited @PierceCA
SEVEN MISTAKES TO AVOID WHEN
SELLING A BUSINESS As a business owner, you will understand how hard it is to build long-term value. Therefore, the one thing you don’t want to do is work so hard to build a successful business to then lose substantial value through avoidable mistakes.
Selling your business is likely the biggest decision you will make. The most common mistakes we have witnessed throughout this process have happened because either you did not have the experience to recognise it, or you did not take the advice of an expert that has experience of delivering these transactions.
Here are the seven most common mistakes… 1. Inadequate preparation
2. Not considering the structure of the business or the business sale.
3. Understanding the value of your business
4. Choosing the wrong professionals or trying to do it yourself
5. Selling your business too quickly 6. Failing to bring your accounting up to date 7. Selling to the wrong person
across our respective manufacturing, product, and customer profiles.
“In addition, the acquisition further builds on our significant market reach in the UK, accelerating our product presence in the fast-growing pod system market, a sizeable growth opportunity for Supreme.”
Liberty Flights managing director Matthew Moden says the deal also opens up opportunities. He says: “Joining a bigger parent group not only creates new opportunities for us to stay ahead in the highly competitive UK vaping market, but also opens up career paths for our employees, and gives customers access to an enhanced product range.
“We are all excited to be starting a new chapter and look forward to working with Supreme’s excellent management team, who really reflect our open and ethical approach to business We are excited to explore the opportunities within the Supreme group.”
Lancashire’s vaping industry has grown significantly in recent years. It has been at the forefront of the development of the sector, with a number of pioneers of the technology developing their products here.
Today some of the biggest names in vaping are based in the county, including Flavour
Warehouse, Totally Wicked and Dinner Lady.
They are part of a successful cluster of businesses that have invested tens of millions of pounds in the area and now employ hundreds of people, exporting their products across the globe.
Blackburn-based Dinner Lady was named Best Vaping Brand in 2022 at the ‘Vapouround’ industry awards this year after securing millions of sales in 115 countries.
It was the second major accolade that the company has received in the last six months, having been recognised for its contribution for innovation and shaping the global $20bn global vape market.
Meanwhile, Acme Vape is investing £5m in upgrading its Preston operation, which is set to create 150 new jobs.
The firm, which manufactures e-liquids and vape products sold under brands including IVG, is currently developing new 80,000 sq ft headquarters in Fulwood.
The site will a feature multiple upgraded, automated production facilities, high quality meeting and networking areas, state of the art training facilities with conferencing features and a range of sales and marketing offices.
A corporate finance professional is the perfect person to guide you through the business sale process. The corporate finance team at Pierce have extensive experience in acquiring and disposing of companies across a broad range of sectors and established connections with a network of professionals who have clients that are interested in acquisitions.
Our team ensure that we engage with those buyers that understand the value of your business. We project manage the whole process, ensuring all parties are aware of the transaction’s progress and ensuring all due diligence runs as smoothly as possible.
We support you throughout your journey from considering the sale to delivering a successful deal completion.
Our practical experience and pragmatic advice help business owners identify a
route to a successful exit and maximises the value achieved. Please do not hesitate to complete our scorecard to get your report on how sale-ready your business is
https://report.pierce.co.uk/
LANCASHIREBUSINESSVIEW.CO.UK
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DEALMAKERS
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