Selling a Company – A Mini Guide Part 1

I have recently been asked to prepare a proposal for a client regarding a sale mandate.  I wanted to create a presentation using my Six Minute Strategist methodology to explain the sale process and how I would go about  it.

It then struck me that this might be of interest to my fellow bloggers and readers so here is part 1 of 2

The Six Minute Strategist Mini Guide to Selling a Company

This is the top level hexagon.

Company Sale 6MS Hexagon

The Six elements of the process are:

1. Planning

2. Preparation

3. Partners

4. Proceeds

5. Process

6. Proposal.

In this Part 1 I will cover the first three and in Part 2 I will then cover the second three.  I will also post the whole presentation on Slideshare to make it easy to download – under a creative commons licence.

Stage 1 – Planning Stage

Six Minute Strategist - Planning Stage

1. Core Team – Agree core transaction team – adviser, external and internal shareholders – key to managing impact on management and employees

2. Objectives – Establish the objectives of the sale process

3. Options – Consider the range of options – merger, spin off, sale to strategic partner, sale to financial partner, recapitalisation, acquisition, IPO, status quo

4. Approach – Evaluate the approach to the sale process; targeted rifle shot, limited auction, broad auction

5. Consensus – Agree the objectives of all shareholders and ensure that there is a consensus; management commitment of time to the process is essential; future of management post sale

6. Other Advisers –  Agree on accounting and legal advisers – appoint when appropriate

Stage 2 – Preparation

Six Minute Strategist - Preparation Stage

1. Positioning – Establish company positioning and selling thesis

2. Documentation – Prepare and verify documentation – teaser, information memorandum, financial projections, sale process letter, list of data room contents

3. Management Presentation – Prepare management presentation for potential buyers – an opportunity for management to showcase themselves as much as the company

4. Data Room – Prepare data room for the due diligence process; legal, accounting, environmental, pension, contracts and loan agreements (change of control), regulatory issues

5. Communication – Consider PR and internal communication issues

6. Timetable – Agree timetable for the process – evaluate impact of public holidays and management vacation plans

Stage 3 – Partners

Six Minute Strategist - Selecting Potential Partners

1. Positioning – Establish the market positioning of the company

2. Company USPs – Identify and classify its USPs and strategic positioning

3. Segment Matching – Match the company to the broad market and compatible segments of the market

4. Segment Extension – Identify adjacent categories where the company can offer product, service, geographic or sector extension to a potential partner

5. Long List – Screen databases to create long list of potential partners

6. Tiered Short List – Narrow Long List to Tier A and Tier B short list of potential partners – on a global basis

In the style of the Six Minute Strategist, this outline is brief and I hope it provides a helpful structure to anyone considering a company sale.

I have uploaded the Presentation to Slideshare.

Please contact me or leave a comment if you find this interesting.  In my next post I will cover Proceeds, Process and Proposal.

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