M&A

A guide to selling your business in turbulent times

What happens when you decide to sell your business during a period of economic uncertainty? Selling a business is a significant step that deserves careful attention even at the best of times, and Canada’s ongoing recovery from the economic impacts of 2020 could pose additional challenges. Fortunately, whether you came to the decision to sell after years of deliberation or were forced to make the move swiftly, there are steps you can take to increase your chances for success. 

The essentials

The fundamentals for a successful process remain the same no matter when you make your move. We’ve summarized the essential stages from early considerations through closing for you below.

Steering confidently through economic turbulence

The pandemic has changed the economic landscape – though the impact has varied across industries and regions – and you need to know where to invest your time and energy to ensure the best return. This five-step guide is designed to help you navigate with confidence.

Step 1 – Establish your divestiture goals

  • Clearly identify your needs from the outset. Knowing why you are selling, the role you want to play in the business during the transition process, and what a successful transaction means to you are critical to defining the correct divestiture
  • Whenever possible, plan your exit well ahead of time to help maximize the selling price while minimizing the disruption to the business and your remaining team in the process.
    • It’s also important to start on any pre-transaction work such as revisiting your corporate structure to minimize the tax implications on the sale.
    • On the other hand, if you need to move quickly, be realistic about what that needs to look like – for example, are you willing to accept a lower price to get out now?

Step 2 – Understand the value of your business

  • Do you know what your business is worth? If not, now may be the time to engage in an informal business valuation or pricing analysis to try to determine a range of value that a buyer may be prepared to pay for the business in the current environment.
  • Demonstrate an understanding of the impact COVID-19 and the 2020 economic slowdown have had on the operations and, if any, the value of your business. A focus on the operational decisions you make today will show a confident plan for recovery to a potential buyer.
  • Know the key trends in your industry. Are there eager buyers that want to branch out into your market? Is your industry experiencing consolidation? Are there strategic buyers that will pay a premium because they can recover rapidly and gain market share? 

Step 3 – Make your go-to-market package attractive

  • A polished and professional package shows buyers that you mean business, demonstrating confidence in the future of your enterprise and that you have taken the time to plan ahead. This typically includes:
    • Blind teaser – a confidential one-pager that contains just enough information to peak a potential buyers interest in learning more about the opportunity;
    • Confidential information memorandum (CIM) – a more detailed information package on the opportunity;
    • Process instruction letter – outlining key matters in the mandate such as what is important to you, where to direct queries and the timelines to respond / submit an offer; and
    • Management presentation – providing an introduction to ownership / management (as required) and an overview of internal operations and future opportunities
  • All this information is based on facts, but keep in mind that the way the information is compiled and presented can definitely have a favorable impact on the process.

Step 4 – Provide as up-to-date information as possible

  • It’s unlikely that your performance this year is directly comparable to your 2019 results, so be upfront and honest about that and share results that are as close to the current date as possible.
  • Transparency is vital, and by delivering the timeliest performance data you also showcase your plan for recovery and focus on operational efficiency. Show interested buyers that you have a plan to weather the storm and are focused not just on surviving but on thriving in our new economic reality.

Step 5 – Be prepared to broaden your reach

  • Keep an open mind and consider how to get as many potential buyers as possible interested in your business. Now is not the time to take a narrow view of where you seek offers.
  • Deals can fall apart for any number of reasons as the risk appetites of lenders and investors change. If you cast your net wide, yet targeted, you are more likely to find a buyer that is interested in engaging in the process and can actually close the deal.

We can help

You’ve invested so much into growing your business. Let’s make that same investment into running a successful sale process. At Grant Thornton Corporate Finance, our business advisors can help you navigate through the sales process, from initial planning to successful close. Our professionals offer meaningful, actionable and holistic advice to help you achieve your business goals and needs. Our commitment is to work closely with you through these turbulent times to help ensure your sales process is managed efficiently, professionally and successfully.