Situation

We were introduced to a company that was considering the sale of their business.

Task

Initially we were approached to perform a valuation, but having explained that this was a theoretical exercise and ultimately would depend on what a buyer was prepared to pay, the approach changed.

The business was more than 25 years old and neither shareholder had a great understanding of finance, business sale and negotiations.

Instead, we were engaged to guide the shareholders through the sale process in conjunction with the legal adviser that introduced us.

Action

The potential purchaser was a customer and required the company’s products for many of their own customers, and also had a global network that they wanted to sell the products through. This significantly improved our negotiating position.

Following an exchange of emails we met at a local airport and spent most of the morning listening to the CEO of the acquirer explaining why they wanted to buy the business. This gave us additional ammunition for our negotiations.

We agreed a significantly enhanced purchase price based on the initial offer, and improved the payment terms and ongoing consultancy agreement for one of the owners.

It is one of the most amicable discussions and negotiations we have ever seen in a transaction which bodes well for the future.

We remain convinced that we could have increased the price by even more, but the shareholders were keen to sell and were more than happy with the upward negotiation in price and did not want to jeopardise the improved terms.

We prepared the detailed information required for the due diligence execise and managed the process from an accounting and legal perspective.

Over the course of the next month we worked closely with the team and the legal advisers and successfully completed the transaction.

In our view, a transaction where all parties are happy is most definitely a good one.