Franchise M&A advisor part two
In my last post I outlined five aspects of credibility that you should determine when finding a franchise M&A advisor. Below are five more points that continue the theme. To read the last entry visit that outline points 1 to 5 go visit - http://www.selectyourfranchise.com/franchise-blog/2009/09/franchise-ma-advisor/.
It is vital that the franchise Merger and Acquisition specialist you choose can help you to find out:
David Young, Chief Executive of Shield Corporate Finance
6. Who are the likely buyers for my franchise business, and why?
7. What is the likely value range for my franchise company; what’s your approach to putting a price tag on it, and how will I know that I’m getting the best price and terms for my business if I choose your M&A advisory firm to sell it?
8. Do you have any client reference letters and will we be able to speak to referees?
9. How do your fees work?
Up-front payments?
Monthly fees?
Minimum cash at close?
Expenses?
How long is the “tail” on the agreement?
10. What can your M&A advisory firm do in advance of a franchise business sale to help us improve our ultimate transaction value?
Shield offer their own Business Improvement Programme and sell businesses with operating profits of £500k. Free valuations are offered to qualifying franchise businesses, in any sector, anywhere in the world.
Franchise M&A advisor
David Young, Chief Executive of Shield Corporate Finance
Ten key questions to identify the franchise M&A advisor who will get you the best price for the sale of your business.
Hiring a franchise M&A advisors to handle the sale of your business is the most important “purchase decision” you will ever make as an owner. So it deserves more attention than a decision to buy some piece of kit, but it often gets less!
Because most franchise owners only sell one business in their lifetime, it’s hard for them to know what it takes to get a remarkable result.
This item is intended to give franchise business sellers with good instincts a tool for comparing Merger and Acquisition advisors by grilling them well. So here are the key questions you need to ask:
1. Who would be working as the lead on my project; what’s their experience of selling franchise businesses, and what else do they do aside from that?
2. Why is your firm the best for our franchise sale engagement? Is it known for a particular industry niche or transaction niche?
3. What steps do you take to ensure the confidentiality of the sale process and to protect my staff from being poached by potential buyers?
4. What is your sell-side process, typical timetable and deliverables set? Can I see samples of those deliverables (a. Initial Profile; b. Confidentiality Agreement /NDA; c. The Book/Information Memorandum; d. Typical contents of any mailings)
5. How will you market my company? (Internet postings, emails, mail campaign, direct telephone calls?)
For points six to ten visit – http://www.selectyourfranchise.com/franchise-blog/2009/09/franchise-ma-advisor-part-two/.
Sell a franchise business during recession – part 2
David Young, Chief Executive of Shield Corporate Finance
Considering selling a franchise business during the recession? Test the market before you go there. So how does business sale market testing work?
Last time we explored why in a recession, testing the market for a franchise business, without committing to a selling the business, can be so useful. If we compare running a business to flying a plane, business sale market testing is like going in for a landing through the clouds, taking a look at the terrain when it comes into view, but being prepared to pull up again if the conditions are unacceptable.
Here’s how the business sale market testing process works:
1. You need a credible stand-alone business plan for the next few years, showing recovery in the future. You need a sense of the value of synergies to a potential buyer today.
2. You approach selected buyers confidentially (even on a no-name basis via an intermediary M&A advisor). You explain that you have a good plan to build stand-alone value for the future, but that you realise that a business sale now may deliver enough of tomorrow’s value today to make it a decision you are willing to consider. So you give them a short descriptive document and invite them to make non-binding offers for your franchise business.
3. You use this focussed, confidential market testing process to find out:
- what your potential buyers like about your franchise business
- and – more importantly – what they don’t like
- what worries them about your business
- what doubts they have about it
- what the internal nay-sayers are muttering
- and what holds them back.
Then you have a choice; pursue the best terms you can negotiate and sell the business, or pull up, fly on and use the insights you have just gained to land a deal on better terms in the future.
The good thing is you won’t have damaged the business the way a failed sale does, for two reasons:
- First, because a business sale market testing process like this can be tightly focussed and extremely confidential (possibly even, as we said, on a “no-name” basis).
- But more importantly, because you demonstrate from the outset that your franchise business has an attractive future and you are simply exploring whether a sale today could deliver enough of that future value now to make it worth doing sooner rather than later.
Useful links:
http://www.shield.uk.com/sell_a_business.html
http://www.shield.uk.com/business_sale_market_testing.html
http://www.shield.uk.com/market_testing_process.html
Tags: business sale market testing, corporate finance, David Young, m&a advisor, Selling a franchise business
