There is a lot more to a successful sale than posting the proverbial ‘for sale’ sign. K-2 Partners’ proven sale process is a carefully orchestrated sequence of activities, all designed to maximize the outcome and likelihood of completion in the shortest possible timeframe. In real life, circumstances can change and no deal has a 100% certainty of completion, but our experience has shown that following our defined process, yields the best results. The key stages are as follows:
Identify seller’s goals
Price is just one component of a successful sale. Often, a seller has additional objectives, such as an ongoing role with the buyer, job continuity for employees, or an income stream from an owned building. Therefore, the first step is to identify the seller’s objectives, as this will play a key role in determining the ‘who’, ‘how’ and ‘when’ of a proposed transaction.
Identify target buyers
When it comes to acquisitions, not only do different buyers have different needs, but their needs may be different from one city to another. Therefore, matching the seller’s objectives with our knowledge of individual buyers’ wants and needs allows us to determine the most likely matches.
Knowing each buyer’s objectives allows us to structure our marketing campaign accordingly. In some instances, an ‘auction’ approach will yield the best results, while at other times, a more targeted individual approach may be better.
At K-2 Partners we constantly track industry trends and monitor competitive activity. We work closely with our clients when it comes to the timing of a proposed sale. We advise the client regarding the best timing of a marketing campaign, depending on the prevailing market climate, the seller’s individual objectives and factors such as the target buyers’ appetite or capacity to process deals.
Data gathering and assessment
Starting with a comprehensive information request list, we perform a ‘deep dive’ on our client’s business, analyzing all financial, operational and commercial aspects. This allows us to not only gain a better perspective regarding a likely valuation range, but also serves to determine how best to package the business for sale and identify any improvement opportunities which may make the business more attractive to buyers.
The deal book is a comprehensive information package which provides potential buyers with sufficient information to prepare an initial offer for the business.
Once the deal book package has been finalized, we approach all potential buyers, execute confidentiality agreements and distribute the material. Buyers have a limited amount of time to make their own assessment and prepare bids.
Letter of Intent (LOI)
Buyers’ bids take the form of an LOI. It must stipulate the offer price, the terms of the offer and each buyer’s business and funding credentials. Bids are assessed and often specific aspects are negotiated. LOIs are typically conditional, but the seller’s acceptance of an LOI starts a period of exclusive dealing with a buyer, which continues until the deal is concluded, or terminated by either side.
The deal book gives sellers an overview of the business during the assessment period. Due diligence typically entails a lot more detail and is an opportunity for the selected buyer to verify financial, operational, legal and other aspects of the business. During this period, the terms of the purchase agreement are also negotiated.
This is the final stage of the sale process and after signing, funds are wired and ownership officially passes from the seller to the new owner.
Selling a business successfully is a complex process. K-2 Partners is highly experienced in controlling the transaction and driving the process to completion as quickly as possible.