Founded in 2012 by Paul Herman and James Caan, one of the UK’s leading entrepreneurs, Bluebox provides expect advice and quality services for business owners on their journey towards the sale of their business and at the point of exit.
We hope you enjoyed our previous blog on Bluebox’s ‘guide to creating an opportunity map for an exit’ and look out for our blogs over the coming months on other various subjects that are relevant to the world of M&A!
With almost 90% of business sales collapsing (based on a recent survey by our team at Bluebox), we are often asked what causes a failed sale process. Are there common themes of failure and, if so, are there things that shareholders can do in advance of their exit to maximise their chance of sale and also enhance the price they achieve?
The answer is that deals can collapse as a result of one of a number of reasons, many of which are completely within your control. Bluebox Corporate Finance was created to address this most worrying statistic. We wanted to explore the reasons behind failed sale processes and assist business owners, at this critical stage of their business, to ensure that they were properly prepared for their best possible exit; an event which is often seen as the climax of their business career.
We have spent the last year assessing the numerous failed sale processes and analysing why these deals collapsed. The results were interesting in so far as many of the reasons for failed processes could have been tackled by business owners prior to heading for exit. Tackling issues earlier would, in our view, have more than doubled the chance of a successful exit. There is so much that business owners can do.
We identified the main reasons for failure as follows:
- Issues arising in due diligence
- Starting a sale process with unrealistic pricing expectations
- Conflicts arising as a result of misaligned management and shareholders
- Lack of systems, resulting in low confidence in trading results
- Trading issues during a sale process; and
- Lack of an experienced advisor to assist with the exercise
Given the 90% statistic I referred to earlier, it is amazing that shareholders don’t address these issues head on.
Here at Bluebox we have analysed the issues that arise and have created a structured approach to dealing with them. The ‘raison d’etre’ of Bluebox is to ensure that these business owners enter a sale process with a fighting chance of success.
We hope that many business owners join our crusade and that we can improve the way in which businesses are sold in this market.
To conclude, we would also like to take this opportunity to invite you to our breakfast event which delves into how to prepare a business for sale to maximise value and achieve the highest possible return.
We will be discussing the key stages involved in a sale process, with guest speaker, FD Melissa Foux, who has sat on various boards including Gü, during the sale process. Please see below:
Event: How to help prepare your Board for an exit? – What you and your Board need to know
• Is your Board ready to sell?
• Why do most business sale processes collapse?
• What will an acquirer attribute value to?
• How will acquirers value the business?
• What is due diligence and how can you help a Board to prepare?
• Key stages in a sale process
• Expert’s view from an FD Perspective: hear from Melissa Foux
Date: Wednesday 28th November
Time: 8:30am – 11:30am
Venue: Goodman Derrick, 10 St Bride St, London EC4A 4AD
Click here to register
The event will be hosted by Paul Herman, Founder of Bluebox Corporate Finance. Paul has sold over 70 private businesses during his career, with values ranging between £2m and £200m, and across a wide range of sectors. This includes a number of well-respected UK businesses such as Models Own, Gü, Princess Yachts, Mappin & Webb, Smythson, Watches of Switzerland, TXM Plant and The British Retail Consortium.
We do hope to see you there.
The Bluebox Corporate Finance Team