01 Getting to know each other
As with any relationship if both parties understand the background, the business, the values and motives of the other there is a better chance of a positive outcome.
Reason for sale
There are many reasons why people may wish to sell their business and knowing this at the outset helps us to put together the right proposition.
Building the relationship
Most of our acquisitions have come through our personal contacts. They are borne of many years’ experience in the profession and a profile that is increasing as we grow. We are always delighted to talk with like-minded individuals and companies, working at a pace that suits you and building a bond of trust that you know means we will deliver what we say.
Timebound or transaction bound
We understand the need for absolute discretion in any discussions or negotiations and we always sign a confidentiality agreement before any information changes hands. These agreements are either for a period of time (say 12 months) or for the period of the discussions. We guarantee that all information we receive is secure and confidential and that at the end of the period, if the transaction does not proceed, it is returned or destroyed. We ask you to make the same commitment to us.
03 Preliminary information request
Placing a value on your business
We try hard to reach a realistic and deliverable value for your business. In order to do this we need some vital information about your business and some history to put everything in context.
Review three years’ financial information
The main information requirement is three years’ accounts and an understanding of the revenue and costs of the business.
We want to know how you work, what assets you use, what your premises are like and how you would improve the business if you had the resources. We are keen to look forward as well as at your history.
Further information gathered
We will talk to you about your market, your competitors and what is happening locally so that we can paint the most detailed landscape possible. This enables us really to understand your business and to be confident that our valuation is complete and deliverable.
Getting to an agreed price
Once we have an idea of value we will discuss with you and consider which of the options best fits your requirements and whether there are other ways of structuring a proposal.
Agree a price
Our style is to offer our best price and to stick with it unless some material issues are uncovered during the due diligence process – we do not “price chip”.
Formal Exchange and Completion
05 Formal offer
Once we have agreed a price we will send you a formal offer which will reflect the details we have discussed and if this is acceptable we progress quickly into the transaction process, starting with the Heads of Terms.
Details of the deal
The main purpose of the Heads of Terms is to provide a detailed list of the elements of the deal and to provide a blueprint for the lawyers to work to in producing the relevant documentation. Spending time on this is very worthwhile so that everyone has a clear understanding of what has been agreed and any issues are highlighted at the beginning of the process before we go too far down the road.
The second purpose of the Heads of Terms is to provide an exclusivity period for the due diligence and legal work to be completed.
Our lawyers are highly experienced in producing the documentation to reflect the agreements made: we have completed many deals together. It is important that the seller also uses experienced lawyers to fully protect their interests and also to save time – it is often a false economy to try and save costs in this area. We can help identify experienced and competent lawyers who will work with you if you wish.
Due diligence providers
In all deals we carry out some standard legal due diligence which involves discussions with you and your advisors in order to fully disclose relevant information. In most cases we will also use an external accounting firm to carry out some financial due diligence which will focus on validating the information you have supplied.
Set a date
The Heads of Terms will set a date for the exclusivity period and will normally propose a date for completion. This will depend on the complexity of the deal but is normally between 8 and 12 weeks.
The main reason we are able to deliver on our promises is that we already have funding in place and our approval process is fast. In general the people who do the deal, sign the cheque.
Consistency and heritage
It is always our policy to encourage sellers to remain with the business after completion in whatever capacity suits their requirements. The business usually reflects the character of the owners and we want to retain this wherever possible and to enhance the operation by combining our skills and experience.
Once the legal process is complete the formal signing will take place at a suitable location, usually our lawyers’ offices. The money changes hands and a new chapter opens for the business.
09 Day one
The first and usually most welcome change that happens is the introduction of our own accounting and administration systems into the business. This is not a painful process: we do not have to install software or go through extensive training programmes. Our systems are modern, intuitive and internet based – all we need is a computer, a browser, a broadband line and a few hours of familiarisation.
We will spend time with your staff to understand how things are done, identify best practice that could be used elsewhere in the business and introduce proven new processes where appropriate. We will produce a training plan to make sure these changes are introduced smoothly.
Planning a new look premises
We have a distinctive and impressive style in the way we present our branches, our vehicles and our people and we will talk to the staff about the timing of any changes and we will listen to their suggestions.
Planning new collateral
We do have to reflect our ownership of the business in all our communications and we will introduce new stationery, brochures, etc. which will have both your local trading name and an acknowledgement that it is part of FSP.
We will very quickly produce an assessment of the fleet requirements and will have a suitable replacement plan in place within a few weeks. A great advantage of joining FSP is the access it gives to a much greater pool of resources and the ability to use these to deliver better quality service to our families.