This article proposes a model of business assessment that business owners, investors and advisors may use when assessing SELL or BUY decisions for Merger and Acquisition (M&A) transactions.
A business assessment in any M&A transaction should not be limited to only a financial and commercial review. While non-financial key drivers are less likely to have a major financial impact on an organisation’s operations, some, like employee fraud and internal control lapses, can be detrimental to a business.
Getting ready TO SELL – What do you need to assess
Many business owners hope to get a buyout offer that will make them instantly wealthy. Some are happy to take profits, even if it means losing control over the business that they founded. Some are passionate enough to want to retain a controlling stake. No matter which category of business owners you belong to, it is very important to consider carefully: Are you ready to sell?
Business owners should do their homework before committing to sell their businesses. This involves understanding their current business position and being aware of what works for them, what the business needs the most and what they themselves want. In answering these questions, they can make reference to the model on the right.
This model comprises 7 critical elements of the management framework, driven by 2 main objectives – Profits and Cash Flow.
It analyses the few key areas in an organisation and helps businesses understand their current position, while giving the owner a chance to identify and respond to any issues affecting the value of the assets to be sold. Hence, the owner can avoid surprises, have greater assurance of the business value and be better prepared for negotiation.