A Ten-Step Guide from M&A Expert - Barn Wilkes, Director at Retail Business:
The world of mergers and acquisitions is intricate and nuanced, and in the food and beverage manufacturing sector there are a lot of moving parts. If you're contemplating divesting your business, the path ahead may seem like a labyrinth. Yet, with proper guidance and a strategic plan, the journey can be both rewarding and lucrative. Here's a ten-step roadmap, summarizing the key considerations for an owner to consider prior to embarking upon the sale process.
1. Assess the Business's Current Position:
Begin by conducting a thorough internal assessment, this is your own business health check. Documenting assets, liabilities, revenues, and growth metrics is vital so that you can understand your financial health, operational strengths, and potential weaknesses. Get into the shoes of your buyer and see how the business looks from the outside. This is often a confronting step for any business owner; Retail Business can assist with conducting a detailed market appraisal for you, and we will advise you on an exit strategy that is measured to your own commercial outcomes.
2. Process Documentation:
Potential buyers require a clear understanding of how your business functions, and during the negotiation/contract access to operations can be difficult. It is best practice therefore to detail every operation, from supply, production, packaging, to distribution. The creation of comprehensive manuals for each department that showcase workflow, job roles, responsibilities, and rostering will help immeasurably to ensure a smooth transition; this will also bolster buyer confidence and will help to manage your buyer’s expectations at the outset.
3. Highlight Your Unique Selling Proposition (USP):
In a competitive market, differentiation is key to attracting premium buyers and to negotiating the best outcome for your sale. Maybe it's a proprietary production method, a sought-after client list, a niche product, a historic and/or luxury brand etc. Whatever your USP, ensure that it is communicated front and centre when you decide to go to market.
4. Develop a Talent Retention Strategy:
A business is only as strong as its workforce and in manufacturing this part is business critical; assure prospective buyers of your team's competence and commitment. As with every Merger & Acquisition effecting a seamless BAU transition is optimum for both the vendor and the purchaser so that both parties can realise maximum value from the sale. Highlight key staff, their experience, and their plans post-acquisition. If necessary, consider offering retention bonuses or contracts to key staff to ensure their stay during the transition phase.
5. Organise Financial Records:
Transparency is paramount in M&A deals. Prior to going to market you need to ensure that the past three to five years (minimum) of financial records are available. These records must include tax returns, profit and loss statements, balance sheets, BAS, and future projections; your financial records must be complete, and well organised. It is essential that all financial information is consistent, and that the documentation can be easily verified and cross referenced. It is important to note that your financial information should clearly support your asking price, and that the buyer will invariably favour those businesses which can provide consistent and historical financial information.
6. Modernise, Upgrade and Refresh:
First impressions always count, and with every Merger and Acquisition the focus is on business continuity (the moving train). A modern facility with updated machinery and technology is of far more appeal to a buyer than an outdated one that may require further investment (which might also impact operations). Ensure that your infrastructure, IT systems, and equipment are up-to-date; also consider small aesthetic upgrades. Just like when staging a property for sale, making your facility look its best can significantly increase its market appeal.
7. Conduct a Competitive Market Analysis:
Understand the current competitive landscape within the food manufacturing sector:
· What factors are current within the industry/economy?
· Who are your main competitors?
· What sale prices have similar businesses fetched?
· Which opportunities are currently on the market?
This analysis will assist in setting a realistic and competitive price for your business. Talk to Retail Business about the current market conditions specific to your business and industry.
8. Engage a Professional:
M&A deals involve multiple intricacies that require expert handling. Retail Business are a reputable business consultancy, experienced in the food manufacturing sector. They will guide you on pricing, legal formalities, due diligence, marketing, relationship management, contractual terminology, and negotiations. Retail Business have access to a broad network of potential buyers, increasing your chances of getting an optimum outcome from your sale.
9. Create a Marketing Strategy:
This is not just about promoting products but promoting the business itself. In M&A each business has its own story, its own competitive advantage, and its own audience. As well as leveraging our own network, Retail Business will create a bespoke marketing campaign across multiple channels to ensure that your confidential sale obtains the widest reach. We will work with you to create a detailed Business Profile (Information Memorandum) and a comprehensive advertising copy with a compelling narrative to showcase your business's history, growth, and potential. This story, combined with solid financials, will significantly attract a range of prospective buyers suitable for purpose.
10. Finalise the Deal with Due Diligence:
Once an agreement in principle is reached with your buyer, the due diligence phase begins. This involves a meticulous review of all business aspects by the buyer. Ensure that all documents, records, and other necessary details are readily available. Engage a legal professional to assist you with the creation of the contract and contractual negotiations, to make certain that your pre-requisites are specified within the contract and that all legal formalities are adequately addressed.
Summary: Selling a food manufacturing business is a multi-faceted process requiring strategic planning, transparency, and the right professional guidance. By adhering to this comprehensive ten-step guide, business owners can navigate the complexities of M&A, ensuring that any deal accurately reflects the true value and potential of your business. Remember, the right preparation and strategy will help immeasurably when you announce your business sale to market.
Make your sale count.
Contact Barn Wilkes at Retail Business to discuss your Food Manufacturing business, we welcome an open discussion with you anytime, and rest assured that all details will be kept confidential.
