Sell-side
M&A Advisory

Maximise Exit Value

Optimise Deal Terms

Efficient Execution

Owners of successful mid-market businesses very often think that a great business will always attract great offers and closing a deal should be straightforward.

They believe that potential investors will naturally understand the strengths of the business and that these strengths will be reflected in their offer. They also believe that once they have an offer it will reflect market standard terms and that due diligence and completing the deal should not be an issue.

The reality is however, that most buyers will look at the business from a very different perspective and whilst they might make huge promises at the beginning of a potential deal, it is very likely that things will change at some point. There are numerous reasons why an investor’s appetite for the deal could change (due diligence, ability to secure financing, personal changes, macro environment, etc.). In fact it is almost certain that a buyer will either try to adjust, push for one-sided deal terms or potentially withdraw their offer. This usually happens at a state when the seller has already committed lots of time and resources to the transaction, leaving them with a big dilemma: accepting a sub-optimal deal or cancelling the transaction. Both options are obviously less than ideal.

When you sell a mid-sized business, you are faced with a number of challenges. Whilst most challenges are well known (culture, operations, HR, finance, etc.) there are three fundamental problems that are very often overlooked:

1. The Trojan Horse Problem: How do you know that the buyer is credible and sincerely interested in buying your business? How do you know that they do not just use the offer to “get through the door” with the sole objective of gathering intelligence? Amongst certain buyers, it is very common to submit initial offers fully knowing that they will not want to buy your business. Their main objective is to study the ins and outs of your business, financials, and strategic plans and then use this knowledge to buy another business which might even be a direct competitor.

2. The Novice vs. Experienced Buyer Problem: Most buyers will have done a large number of M&A deals in the past and/or have made a number of offers to other businesses (that you might not be aware of). They know how to structure a deal, how to perform due diligence and most importantly: how to take advantage of an inexperienced seller and how to chip the price.

3. The One Against Many Problem: For any deal worth more than £10m, buyers will employ an army of buy-side advisers, due diligence experts, lawyers, accountants and bankers who will leave no stone unturned and whose entire job is to find weaknesses to justify a reduction in price, adjust the terms of a deal and to shift risks to yourself. The hidden costs of not having an M&A adviser are very significant, in particular if you take into account the opportunity cost of an unsuccessful transaction.

When we accept a new mandate, we ensure that the chances of achieving a successful deal at favourable terms are maximised. Before we even speak to potential buyers, our team of experts will analyse your business through the eyes of an investor to identify deal risks, strengths and weaknesses, but most importantly opportunities to increase valuation and deal certainty.

We will then conduct extensive buyer research to ensure that we only consider credible buyers that are likely to be a good fit for the deal. Based on this extensive preparation that usually also includes building a financial model, a comprehensive investment memorandum and other deal documents, we will agree the appropriate deal strategy with you and execute the transaction accordingly.

Once the deal strategy is agreed, we will then drive the transaction and report to you on a regular basis. This includes leading all aspects of the deal to ensure that the entire process of buyer communication, negotiation, due diligence and completion procedures will be conducted as efficiently as possible with the aim to achieve the best possible results for our clients.

Case Study:

From “No Interest” to 11 offers and an exit at a 52% premium valuation

Mandate:
Sell-side


Sector:
Financial services


Revenue:
£9.3m


Employees:
30+


Client Satisfaction:
100%

Problem

The shareholders wanted to sell the business and approached a number of potential buyers directly. Despite having numerous meetings with key decision-makers and sharing comprehensive financial and business information, no offers were received after more than 12 months.

Objective

Dyer Baade was hired to prepare the business for a sale, identify buyers with a strong cultural fit and conduct a competitive sale process.

Solution

We performed a comprehensive strategic assessment and based on our findings, we developed a deal strategy that included resolving potential deal blockers, preparation of a market-leading investment case, value-supportive financial model, investment memorandum, data room etc. Based on extensive buyer research and rigid validation, we approach a limited number of parties of which c60% submitted offers. We used this buyer interest to run a very competitive sale process, leading to a deal that closed at a valuation premium of 52%.

Case Study:

Creating a competitive transaction process to maximise valuation and deal certainty

Mandate:
Sell-side


Sector:
Financial services


AUM:
c£800m


Employees:
26


Client Satisfaction:
100%

Problem

Our client received a highly attractive offer through a direct approach from an acquirer. They decided to accept the offer with the aim of completing a deal within a reasonable time frame. The problem was that the acquirer continuously made excuses to delay the deal and after more than 12 months the deal was still not signed.

Objective

Dyer Baade was hired to find an alternative buyer and complete the transaction at the best possible price and most importantly, to avoid a prolonged process.

Solution

We analysed the business and the potential buyer universe to determine the best possible acquirers. We then started a competitive process that resulted in 9 offers to acquire the business of which 3 exceeded the previous valuation. We used the competitive dynamics to a) validate the acquirers and b) negotiate a higher valuation at favourable terms. The preferred buyer was granted only a short period of exclusivity, leading to a swift completion and a very successful commercial outcome.

FAQs

  • It is never too early to get the right M&A adviser onboard. You might receive an offer out of the blue and without an adviser it will be difficult to evaluate your options. It should also be noted, that the best M&A results can be achieved if the business is well prepared and the exit is well timed. Get in touch and we will see if we can help you.

  • Maximising the value of your business involves enhancing its financial performance, operational efficiency, market position, and attractiveness to potential buyers or investors. Our M&A experts at Dyer Baade can give you detailed feedback and advice on what strategies can work best for you. We can help you to understand your business through the eyes of an investor and know exactly what can be achieved in a realistic timeframe.

  • At Dyer Baade we provide M&A advice for CEOs, Entrepreneurs and Investors, with a particular focus on deals with a valuation of £15m - £150m, although we sometimes can go below or above this range.

    If you have revenues that clearly exceed £1m, 20+ staff members and/or strong organic growth, an initial conversation certainly makes sense.

  • We are sector agnostic, but have a strong focus on transactions in financial services, professional services, media and other sectors with a strong people element.

  • Yes.