The decision for shareholders to sell a business or for a Group to sell a division requires careful consideration and planning, but there are subtle differences for each circumstance. The divestment planning helps put in place the road map to maximising a successful sale.
The divestment planning process typically covers:
- Ensuring corporate valuations, including a sum of the parts valuation for multi-business groups are up to date
- A review of potential buyers and an assessment of the additional (synergistic and strategic value) they are likely to place on the business
- Value implications of new initiatives and opportunities
- Consideration of a potential sale on other stakeholders such as employees, customers and suppliers
- Review of historical financial performance to assess implications for a potential bid, including accounting policies, pro forma financial information and non-core or discontinued operations
- Are budgetary and forecasting systems robust to produce forecasts for inclusion in an information memorandum?
- Preparation of an information memorandum covering sale process, company background and operations, products and services, overview of customers and suppliers, structure and employees, historical and forecast financial information
- Establishment of a data room, including protocols, data quality review, population of the room and ongoing management
- Assessment of internal and external support needed
- Consideration of whether a Vendor Due Diligence report is appropriate to the circumstances
- Preparation of management presentations and coaching management for the process
- Protocols for Q&A process and management
- Other due diligence considerations which could include, but not limited to environmental, legal and operational issues
- Completion process, including closing accounts and audit
- Establishing team and communication protocols, project management and timetable
- Plans to manage ongoing potential warranty and indemnity claims
In the case of a sale of an entire business, the following additional steps are covered:
- Understanding individual shareholder needs, including form of consideration, taxation implications and any ongoing day to day involvement in the business
Where a Group is considering the sale of a division, the following additional steps may be covered as relevant:
- Implications of sale on Group strategy
- Assessment of separation implications, including:
- Ownership of assets
- Staff transfer
- Taxation
- Transition service arrangements
- Ongoing service and other agreements (leasing of premises, ongoing customer/supplier relationships between buyer and seller)
- Potential for redefining systems and processes for the Group and its retained businesses (post the sale)
This service will help ensure that a business or division is ready to approach the market in an efficient and professional manner with the aim of maximising the value on consideration and limit the ongoing commitments of the seller.