Ranked #1 sell-side M&A advisor in sub-Saharan Africa (2014 Zephyr/Bureau van Dijk)

Operations Manager Kate Carty answers a fundamental question about our refreshingly different approach.

Q: You state that the ‘traditional’ method of selling a business is flawed and yet it has worked successfully for decades. How can it be flawed if so many businesses have been sold using this method?

A: It can be very simple to sell a business if maximising the sale price is not an issue. I am sure Alan Sugar could sell his business empire tomorrow for a (relatively) paltry R500m for instance! If the fact that in the marketplace an acquirer may be willing to pay R800m+ was not an issue then I am sure he would be very happy.

However, business owners all expend a huge amount of time, money, commitment and sheer hard work on their businesses to grow them and make them successful companies. After what for many is a lifetime’s work it is not unreasonable for them, when selling, to want to achieve the absolute maximum value for their efforts.

Traditional valuations take the most recent historic financial performance of the business and apply a multiple to its (adjusted) profits. The resultant figure is the ‘value’ of the business and indicates how many years it would take an acquirer to regain the monies that they invest.

The tragedy of this style of ‘valuation’ is that it takes no account of all the assets of the business. For example, a business may also have a stable customer base, a long history of successful trading, a loyal customer base, blue chip clients, long term contracts, low staff turnover, ownership of valuable intellectual property, a strong and positive brand name, etc.

All of these assets of the business have a value but without actively marketing them the value to an acquirer will never be known. A company sold without promoting these valuable assets is a company that is undersold. It is a cornerstone of our entire process that each and every business we sell has all the above assets (and more) proactively marketed to each potential acquirer and it is this that is a significant factor in ensuring we achieve maximum value.