Creating Pre- and Post-Deal Value
TheNonExec has a natural interest to see companies that we are involved in go on to have a sustainable future. We aim to facilitate strategic exits that not only release value to the business owner(s) for what is usually their whole life’s work; but also to attract, for the buyer, a company that has the ability to create ongoing value into the future.
A recent PwC survey surveyed 600 senior corporate executives from a range of industries globally about their experiences with value creation through M&A. This revealed that divestors recognise there is often much more they can do to prepare assets for sale and make them more attractive to buyers. Interestingly of these seasoned M&A executives:
– 84% believed there was room for improvement when presenting upside opportunities to buyers.
– 89% believe they could do more to optimise the asset from a tax and legal structure perspective.
– 39% agree there is also significant room for improvement in optimising the asset’s financials.
We wholeheartedly agree that preparation is key to maximising the opportunity of the exit.
Increasingly, our clients are seeing the value in conducting pre-sale due diligence. Not only does this allow sufficient time to focus on housekeeping issues, this provides the opportunity to present the full potential of the business and a vision for the future. It also allows the seller to anticipate possible buyer concerns so that they are able to mitigate these to avoid any surprises during the actual sale process.
Our mission is to create true win-win opportunities, for the seller and buyer. We know that careful preparation of the company as an ‘asset for sale’ is vital.
So what about creating value beyond the deal? The PwC report holds that again, it’s all in the planning and this needs to happen upstream of the sale. It recommends three steps for successful ongoing value creation, as follows:
- Stay true to the strategic intent.
- Be clear on all the elements of a comprehensive value creation plan – it should be a blueprint, not a checklist.
- Put culture at the heart.
We recommend you read the insightful full PwC report here.
Currently we are seeing the external factors of Brexit are causing a degree of uncertainty, so many companies are pausing to reflect to see what happens on March 29th. We hold there is no better time before a company potentially goes ‘on market’ to use this time for strategic planning and preparatory due diligence.
Of course many business owners will wish to engage an experienced M&A professional to help navigate the preparatory phase. If you are considering an exit in the next 1 – 5 years, why not talk to us to understand how to prepare the business?