George Yule, director of BGE Consultancy
Following on from the last four years of local economic challenge associated with the industry downturn in the oil and gas sector, many businesses are hoping for better times ahead but also bracing themselves for further financial uncertainty as a consequence of any post-BREXIT outcomes - and who knows what the impact on local businesses will be?
The North-east of Scotland has been - and will continue to be - an incubator for realising entrepreneurial aspirations but post-recession and pre-Brexit many battle-weary business owners are facing up to a recurring question: ‘Should I be preparing a succession plan that enables me to exit the business?’
This may be due to their lack of appetite to experience another cycle of reduced revenues and tighter margins, or it may simply be because it is their time to step back from the front line of business combat. Whatever the specific motivation, there's no doubt the secret to a successful exit is a combination of planning/preparation - and timing.
For many local business owners, the prospect of third parties (aka potential buyers) carrying out detailed diligence into the very heart of their business activities is an intrusion, with the potential to become an unwelcome digression on normal day-to-day operational activities.
However looking at it from the acquirers viewpoint, given that the incumbent owner is unlikely to remain in position post-deal, it's absolutely essential that they fully understand what they're buying, how the DNA of the business operates, where the company sits in their specific market, their unique selling points, the extent of any intellectual property, their target markets/sectors/clients, who the main competitors are; and whether the business has further growth potential.
This part of an exit process is generally referred as due diligence and the business's commercial interest or privacy is usually protected by a formal confidentiality or non disclosure agreement between the parties.
For any business owner considering selling up but perhaps unfamiliar with the process, my advice would be to start planning for this as soon as possible as there are a number of actions along this journey, including carrying out a full review of every area of your business from commercial documentation, financial processes, budget forecasts and market knowledge to HSEQ and HR procedures to ensure they are up to date, accurate and will withstand third party scrutiny.
Typically it can take up to two years from the point of planning an exit to the reality of a achieving a sale, with a successful outcome being largely dependent on a blend of the business’s strength and performance - and also timing in terms of market conditions.
There are plenty of case studies and qualified advisors in the local area who can share experiences, so do your own homework before setting out along this journey.