Can a growth plan deliver the right exit value?

Multiples vary

Price is typically calculated by applying a multiple to the core profitability of the business. Buyers will pay a multiple based on how reliably the business can deliver that profitability.

Sectors vary, but size and geographic spread will also impact.  Larger businesses are generally more sustainable, have resilient and established management teams and clients, and will attract more sophisticated, better resourced, buyers/investors.

International buyers could extend the businesses across their wider footprint, creating additional synergies.

Plan to succeed

You need a plan which works for your business, but some strategies deliver time and again.

Get management right

It is key to develop a credible management team behind the founders.

A Sussex engineering consultancy recruited two key individuals from large international companies, attracting them with growth shares/share options, a local base, and greater autonomy.  When allied to a focused international growth plan, it led to an international buyer approaching the business. The target business fixed a key strategic gap for the buyer, who found them through an international trading connection. 

Create your own international footprint?

Setting up overseas subsidiaries can be expensive, but it can also be done creatively and economically.  A client who sold to an international group established an international footprint from a Brighton base. They rolled out a series of overseas franchises, protecting themselves by contract.

Sales leads were identified in different countries, each licensed to use the business brand and operational model, social media, and know how material, with the support of someone “in country”, building an international client base. The eventual buyer had an international business and a global business model.

Get the right client mix

Security of clients and revenue is important, guaranteed with long term contracts where possible.  If this is not possible, you need to demonstrate consistent trade over a sustained period with quality customers.  This can be supplemented by introducing the buyer to key customers. Avoiding an over reliance on one, or a few, clients is critical to reduce risk.

Being paid for your “secret sauce”

Many businesses have a unique business model but, for some, this is not capable of registration as intellectual property.  This know how can still be leveraged if you are smart.

An airline food business successfully sold to an international airline because the buyer wanted the business, and a strong team, but were prepared to pay a premium for the operational methodology.

The businesses owner demonstrated a process for designing and testing creative meal options which worked at altitude.  Describing a repeatable process was key and led the CEO to create a business process for the buyer in Singapore.

I am a lawyer not a corporate finance advisor but, like many experienced advisors, we can share techniques to produce results.

Our corporate team is here to guide you through the M&A transaction process.

For any queries or an early discussion, please contact us by email or call +44(0)3333 231 580.