It is not uncommon for business owners to be approached directly by potential trade buyers, or people acting for trade buyers, about selling their business ‘off-market’. Business owners can be tempted by the thought of a quick and simple deal without the cost of engaging an adviser.  In reality, simple deals do not exist and the adviser will usually be able to extract additional financial consideration that will more than cover their costs.

There are further significant benefits of engaging with an experienced corporate finance adviser:

  1. Your business is likely to be the most valuable personal asset you own, built up over years of investing your time and resources. An adviser can explain and illustrate the range of options available to you so you understand which is the most appropriate transaction for you. You can then set the terms of the form and structure of a deal on which you are inviting interest from buyers and investors.
  2. The buyers that approach you undertake multiple transactions a year and are vastly experienced in buying businesses. You need to have someone on your side that can match that experience and knowhow when you consider a transaction.
  3. The most effective way to drive and increase value in a transaction is to generate competitive tension in a process. The first offer is unlikely to be the best offer and it is always worth bearing in mind that the key reason why buyers like ‘off-market’ deals is that there is no competition – they are cheaper!
  4. The Consideration received by shareholders is a combination of the Enterprise Value of the business plus the excess Balance Sheet value. Unadvised buyers often miss out on significant value by a lack of understanding all of those elements that are crucial in maximising value. In nearly all cases, unadvised businesses lose value on the balance sheet as they do not understand the nuances around excess cash and working capital.
  5. Transactions are time-consuming and stressful and we would not recommend starting a deal unless you are (almost) certain you can complete it. A good adviser will ensure you only go to market when you and your business are ready.
  6. You will need a lawyer for all of the legal documentation. Some significant elements of the legal documentation contain commercial and financial elements that lawyers will be less comfortable advising on.
  7. Identifying buyers, generating offers and maximising value is a small part of what an adviser does across the whole transaction, and our clients often underestimate the complexity of the execution phase of the transaction and the real ‘value add’ from engaging a corporate finance adviser.

We would always advocate engaging with a corporate finance adviser before you start a formal process, even if it is not with Knight. We have numerous examples of when engaging an adviser has delivered a far better outcome. Confidentiality means we cannot share them publicly, but we can provide strong client feedback to validate this.

“We were approached directly by a trade buyer but we wanted to explore all of our options before agreeing to a transaction. We engaged with Knight to run a wider process that generated some competitive tension and to understand what other options we might have. We never thought Gamma would be the likely buyer of the business but they put forward the most compelling deal structure that suited all shareholders. We are so glad we had Knight working for us.”

~ Will Morey, Chief Executive, EnableX Group

“We’ve navigated transactions both with and without an industry-specific corporate finance adviser. The contrast, we assert, is extraordinary. “

~Dean Burgin, Director of Boxx Communications Limited