Lots of guidance is beginning to emerge from the deal community. This is Jonathan Grant's very short list of key issues for businesses to consider so that they are an attractive target for buyers or investors.
The list is deliberately simple, without lots of emotive language, to provide a practical guide.
- Demonstrate pre lock down revenue/profit growth (was core business strong)
- Consider the likely impact on your sector and develop a credible recovery plan
- Identify how your business will return to revenue/profit growth – if your predicted revenue reduces, what steps can you put in place now to increase profits/revenue?
- Develop a flexible 3 year plan, and show how your business could be accelerated with greater investment/resource
Redundancies or cost savings will not be seen as negative over the next 12 months if they are well planned and within the above framework
How can you improve your business within this framework?
- Identify targets to acquire, to grow revenue, generate cost savings/synergies and make sure that if a multiple of profits is paid, it is at a level below that which you would seek (if on sale you would expect 5x sustainable profit, pay less than 3x on acquisition).
- Talk to your competitors and industry contacts as this may provide unexpected opportunities (many of our best client deals have come from such links and there is no introduction fee to pay!)
- Continue to look for great talent, unexpected talent may be available in the current market.
- Maintain your profile and identify new routes to market.
These are all objectives which most businesses will be thinking about, but will be top of the list for investors, or those looking to buy. We are seeing new deals emerging already, with PE interest high and larger corporates looking to fill gaps in their own production or supply teams.
If you want more background on any of the issues covered above please get in touch.