Following the post-Covid boom in M&A, activity levels have started to slow. Where before the availability of cheap debt had fuelled transaction activity and increased valuation expectations, uncertainty driven by high levels of inflation and rising interest rates, has squeezed potential returns on new deals. Deals are now becoming more difficult to do.
The consequence is that buyers are now taking longer to do their due diligence – testing business models more closely and looking carefully at current trading trends in order to be comfortable with the sustainability of their investment thesis. And the longer a deal process takes, the higher the risk that the deal will not complete. Even worse, it can be a drag on the underlying business as management is distracted by the deal process.
Ensuring a successful deal
The answer is in deal preparation. The most successful deals are the ones where there is compelling evidence to support the key selling messages and which underpin valuation. This is achieved through taking the time up front to ensure that there is sufficient data and logic on hand to satisfy buyer due diligence.
Timing is also key. Rushing a business into a sale process will rarely achieve the best valuation. Understanding the key drivers of a business will help identify when the best time to sell is. Putting a plan together around this helps ensure that you as a vendor are on the front foot going into a sale process.
At Cowgills Transaction Services we help clients prepare for a deal through a thorough exercise that looks to understand the key dynamics of your business and then looks at the underlying data to support them. Even if this information is not already reported on a regular basis, we can use multiple data sources from within the business to help support your key selling messages.
We know what buyer due diligence will be looking for and therefore we can help you anticipate the challenges you will face through the deal process. By ensuring that you have the evidence to do this before you go to market will increase your chances of a successful deal.
So if you are looking to sell your business, contact me on andrew.nelson@cowgills.co.uk, or call me on 07768 887 118 to arrange a discussion on how we can help you achieve a successful transaction. You can also get in touch with us via our website right here.
Disclaimer
The information was correct at time of publishing but may now be out of date.
