What is my business worth?
The theoretical value of your business will be calculated as a multiple of underlying earnings (or revenue) adjusted for excess cash/debt. In practice though, it is worth what someone is prepared to pay for it. It will be worth different amounts to different acquirers, the key is identifying and engaging those that will be prepared to pay a premium – the strategic acquirers.
When is the best time to sell?
Timing your run is key. You clearly need to sell on the up, yet crucially you need to leave something on the table for the acquirer, so don’t be too greedy or you will miss the cycle. M&A is a cyclical business and if you delay too long then you may need to wait for the next cycle. To maximise your value you need to time your exit so that market, sector and company conditions are favourable.
How do you achieve global reach at ICON?
As technology specialists, we have a database of technology acquirers worldwide and communicate with them regularly. We have recently sold businesses to acquirers in Canada, Columbia, the US and Europe.
How do you maintain confidentiality during the process?
This is a key part of our role and one we take seriously. We never disclose confidential information on a client until a Confidentiality Agreement is signed. All communication is then through us and by only working with a small management team and keeping meetings off-site we minimise this risk.
Will I get paid in cash?
Yes cash will always be part of the consideration, but all the consideration may not necessarily be paid in cash at completion. Buyers may pay consideration in their own shares (which may need to be held for a period), loan notes or the payment may be deferred until after the completion date or be partly by way of an earn-out.
What is an earn-out?
An earn-out is a commonly used mechanism to narrow a valuation gap that may arise between buyer and seller, whereby the buyer will pay further consideration if the vendors achieve revenue or profit targets after completion. The time period for an earn out can be for a few months or a few years.
As an owner/manager, will I be expected to stay after the sale?
The key is to offer the buyer the commitment to stay if needed. This reduces the buyers risk and so increases your value. Most entrepreneurs stay for a handover period, but rarely more than a year or so. To allow for this, as an owner manager you should therefore be looking to exit ahead of your intended departure date.
Who pays your fees?
Our fees fall in two parts, an initial fee that is paid by the company and then a success fee that is deducted from the shareholders consideration (along with other tax and legal fees) and paid by lawyers handling the sale on completion of the transaction.