Axis to attend Care Show 2013!

Come and Meet the Team at the Bournemouth Care Show – 19-20th March 2013

Following the success of last year’s show we are delighted to announce that we will be exhibiting at the Bournemouth Care Show again this March.  Please put a date in your diary and come and meet us!

Over the years we have built up a strong presence within the Healthcare sector enabling business owners to realize the full sales potential of their businesses and gain the maximum sales value.  Whether you are planning to sell your business now or in the future we would be happy to hold informal, no obligation discussions with you during the show.

We have secured the same great space as last year, just outside the seminar rooms in Windsor Hall, so please come and meet the team.

To read the full press release please click here: Press Release_ care show 2013.pdf

Robin Boxall-Hunt, Managing Director of Axis Partnership
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I Want To Sell My Business Fast- Avoiding Procrastination

I want to sell my business fast- how can I speed things up?

Money loves speed. On the other hand procrastination kills speed (and takes us away from potential money we could make!). If I'm determined to sell my business fast, I need to keep my productivity in gathering information and marketing my business up. 

Here are 11 powerful tips to overcome procrastination and speed up your productivity:

1. Bite Size tasks: Make each task to be accomplished small enough to get started. Even writing a book can start with a small task like outlining or writing the first few words. If you are planning to run and find it difficult to get started, forget about the whole running process and commit to just one simple task – put your running shoes on. More often than not you will end up doing a run.
2. Kill perfection: Trying to get it perfect will stop you in your tracks. It does not mean you have to do a bad job. Start the task or project in any form to get it finished. When it’s finished you can look for ways to improve or make it better.
3. Change your ‘internal’ dialogue: Rather than say ‘I hate doing it’ why not say ‘I choose to do it’.  This will empower you to start it off even though you may not like the task (like tax returns etc). If you are having a bad day, it is easy to put off doing things as you are not in the ‘mood’. Don’t let the ‘mood’ control your life. Change the dialog to ‘I will start this now’.
4. Get a reward: Set rewards for accomplishments. These rewards can be simple treats at the end of tasks. I do not like sitting in my office for more than 45 minutes. So if I have to do something that is going to take 60 minutes, I look forward to finishing it so that I can treat my self to a brisk walk and cappuccino.
5. No distractions: You are in control of everything that distracts you. Turn the phone off (unless your task involves using the phone), move away from all ‘surfing’ devices and get on with your task. If you are likely to be interrupted by co-workers and visitors make arrangements not to be disturbed.
6. Worship your diary: Block out time for all the important tasks in your diary and set reminders if necessary. Let the diary guide your day. Get the key tasks done as early as possible as this allows you to be flexible later in the day to ‘react’ to unexpected events.
7. Get accountability:  Have someone (a colleague, co-worker or a coach) hold you accountable for finishing certain tasks. I share my diary with my coach. I hate giving excuses to her as to why I did not complete some tasks. This motivates to get on with it.
8. Review your time: Each day, review what you have accomplished. This is one of the most frightening exercises. You will find hours within the day that you cannot account for in terms of accomplishments. Our life is short and too precious to be wasted by procrastinating.
9. Clear Clutter: Although procrastination is function of your mind, physical clutter around you adds to your mental clutter. Your desk (or desktop) should be a place for job in hand and clutter free. Clutter adds to your frenetic mind and nothing else. Get rid of it.
10. No multi-tasking: Successful multi-tasking is a myth. It gives us an illusion that we are contributing towards productivity.  It is there for overly scheduled and stressed-out people to feel productive and efficient. Under the illusion of multi-tasking we are in fact ‘serial tasking’. That is jumping from one task to another but think we are multi-taking (working on all those tasks at the same time!). Focus on one thing at a time until it is done!
11. Make a decision: Make a deliberate decision to fight procrastination and become a high productivity person. 

Richard Haden-Scott, CEO of Axis Partnership

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Is Private Equity the Best Deal?

In the current press we hear a lot about financial buyers and about how they are filling the void left from the Banks restricting funding. However, when deciding how to sell your Company often a strategic buyer - a bigger Company whose goals complement yours - is the best buyer for you, as they will pay a higher value and require you less post sale.

In the world of middle-market acquisitions, there are generally two kinds of buyers. Financial investors, like Private Equity groups or Venture Capitalists, are in the business of buying and selling Companies. A strategic acquirer, on the other hand, is another Company in your industry that thinks your business would be a great addition for them to help grow and strengthen their market share.

When you’re ready to sell, a strategic acquirer can be the best match for you, but it takes a little more work to get to them. Here’s why:

1) Buying companies is not a strategic acquirer’s primary focus

Financial acquirers are in the business of investing in companies and seeing a return on that investment. Day in and day out, they look at confidential information memorandums, send out indications of interest and letters of intent, and negotiate the purchase or sale of portfolio companies. The process flows (comparatively) smoothly because financial acquirers literally exist only to find companies to buy and sell.

Strategic acquirers, on the other hand, have plenty of other things to do. Their primary purpose is to maximize the value and profits for shareholders. They're busy developing new product lines, growing their customer base, coming up with new advertising campaigns, conducting market research. These Buyers are spending their time trying to make their profit & loss reports look good, not focusing on buying and selling smaller companies, so it’s harder to get their time and attention.

2) It's hard to find the right person to talk to

Take a look at the website of any private equity group, and within 30 seconds you'll be able to find full contact information for each of their partners. If you’re lucky, the partners will be neatly sorted by industry specialty. And you can get them to take your calls and look at your confidential information memorandum without too much hassle. After all, that's what they're there to do.

By contrast, reaching out to a strategic acquirer can be extremely difficult. Let's say your Company places specialist engineers for the aerospace industry. You want to sell the Company and you’re pretty sure that Hays would want to take a look at you. Do you know how to sell your Company to them? Where do you start?

Well, Hays has divisions and different Companies who specialise in different placements, whether that be commercial aerospace, defence and government contracting, space, security and technology solutions, to name a few.  Each Company is autonomous and has its own goals, strategies, business development teams, relationships with corporate management, and political manoeuvring. And each division may approach acquisitions differently.  In one department, the business development people may be actively charged with seeking new companies to buy; in another, they may be limited to managing the process.

It takes a lot of research and legwork to drill down into each of these departments, determine your best contact points, and try to actually reach those people. Three FDs may slam the door in your face, but the fourth could be looking for a Company exactly like yours to expand their particular section of the Group.

Then you get to do it all over again for Michael Page, Reed, Impellam Group and anyone else you think might be interested.

The extra work is worth it. Here’s why.

1) You’re much more likely to get a deal completed

Once you’ve developed a strong relationship with the right person at a strategic acquirer, you instantly have the best internal flag-carrier you could ask for. This person will be an extraordinarily strong champion for you, and for this deal.  He or she had to convince the higher-ups this deal is absolutely essential. If the deal falls apart, your flag-carrier’s managers are going to be asking what went wrong: “Didn’t you tell us four months ago that we just had to buy this company before one of our competitors did?”

A Private Equity group, by contrast, will look at many companies, and start discussing what a deal might look like with quite a few of them. But they’ll only close a small number. They know that there’s another Company, and another deal, right around the corner. Once a strategic buyer starts a process, they have a very strong incentive to see the deal through.

2) The strategic acquirer is likely to pay more

The best way to get a premium price for your Company is to put buyers in competition with each other. A Private Equity group certainly doesn’t want to pass on a golden investment and then see one of their competitors take advantage of it, but they know there will be plenty more companies to look at. By contrast, if both Impellam and Hays need the exact kind of Recruitment you do, and both want to bring that capability in-house, they’re not going to have that many options. Rather than being a commodity, your Company is a unique service provider that is going to give one player a competitive advantage over the other.

The bottom line is that a bigger player in your industry is likely to care more about your particular Company, and this particular deal, than a financial investor would. Private Equity groups are more focused on the numbers: They want a profitable Company in a good industry, and that’s about it. When deciding how to sell your Company and what buyers to pursue, a strategic acquirer knows your product, sees the synergies between what you do and what they do, and wants to make the deal happen because of what it can do for their strategy and bottom line. They want to integrate you into their business model. All that means a higher price and a better chance that the deal will close.

Adam Croft, Senior Business Broker

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A Video Overview- How Can Axis Assist Me When I Sell My Business?

How Can I Sell My Business with Axis?

Here at Axis Partnership we pride ourselves on our ability to assist people considering an exit as professional Business Brokers.  This video is a brief overview to show how the assistance of an experienced agent working with you, your legal team and your accountants can help smooth the transition from initial contact and preparation through valuation, the commencement of marketing, introductions, due diligence and completion of sale.  

Robin Boxall-Hunt, Managing Director of Axis Partnership

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I Want To Sell My Business Via A Management Buy-Out (MBO)

I Want To Sell My Business To My Management Team

Traditionally it is well documented that less than one in five business owners would consider selling their businesses to their management team.  The reasons are obvious – Management Buy Outs (MBO’s) need careful thought and planning.  However since 2008 and the impact on appetite and demand in the Mergers & Acquisitions sector as a whole, the perception of MBO’s have begun to change and they have become more popular with a number of key advantages.  As a Business Owner, do the benefits of an MBO outweigh the potential risks?

Advantages Of An MBO

So what are the advantages of an MBO?  Rather than have to go to the market place, the Buyer has instantly been found, and the Vendor will be confident that they have the same business ethics and ethos to ensure client relationships are preserved and the name of the Company and legacy is maintained.  Also one of the main advantages is that confidentiality can easily be contained in-house, removing the risk of competitors finding out that the Company is on the general market and any detriment affect from this relating to clients or staff.  MBO’s allow Vendors to be more comfortable about structuring a deal over a longer period of time than they would do with an unknown 3rd party, ensuring there is minimal disruption.  The risk involved in the change of power can therefore be minimised.

Disadvantages Of An MBO

As with everything in business there is another side to the argument, with the main case against MBO’s being that as the Vendor you are limiting the competitive number of Buyers to just one!  A Company being marketed for sale in the open market could easily generate 8-10 potential purchasers, where an offer price could be significantly higher due to synergetic or competitive reasons.  Funding is also a common problem with MBO’s and can be the main cause for the deal to fail, whereas Buyers generated from open marketing would need to provide proof of funding, normally before serious negotiations even get started.  Often Vendors find themselves having to agree to a lower value deal with the MBO team than the Company is actually worth, due to this being the maximum amount they can raise.  Also a point for note is should discussions get underway for an MBO then there could be the risk of the management team not keeping their eye on the ball and the Company’s current performance could begin to suffer.  Alternatively, and even more or a concern to a Vendor, is that should the sale fall through, the Company would be left with a severely demotivated management team.  If the Vendor then looks to take the Company to the general market this instability would devalue the Company accordingly.

The Key to Success

The starting point is to ascertain whether or not the management team will have the appetite, ambition and leadership capability to grow the business, followed by access to finance, as this is the critical part! Anyone thinking "I want to sell my business," should seek specialist help and advice to ensure that a succession plan is carefully implemented so that a flexible, staged exit can be managed, ensuring that sensitive issues and individual aspirations can be dealt with. Working alongside experts in this field can ensure that the business is made as attractive as possible in order to achieve the necessary finance and of course, allowing the Vendor to achieve the full value of their Company!

Adam Croft, Senior Business Broker

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A Video On Due Diligence- What Happens Once A Deal Is Agreed?

When you sell your business, agreeing a deal isn't the end.

At Axis, we do more than just introduce you to buyers, we stay with you throughout the whole of the Due Diligence process.  When you sell your business, you need to be aware that there's still a great deal of legwork, preparation and negotiation as buyer's agents go through your business with a fine tooth comb after you accept their offer.  This video explains the ways Axis can assist you during this period, and explains some of the reasons we may be needed.

Robin Boxall-Hunt, Managing Director of Axis Partnership

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How To Maximise A Buyers Finance Model To Your Advantage

What do ROI and IRR mean and how can understanding them help sell my Company?

All astute Business people, and in particular financially driven Buyers (Venture Capitalists, Private Equity Firms etc), will know the cost of equity and will only make investments that provide a return in excess of that cost within a reasonable timeframe.  In general terms, financial Buyers of SME Companies are looking for a Return on Investment (ROI) or Internal Rate of Return (IRR) in the range of 20-35%, depending on the sector of operation and the risks associated with that particular industry.  Providing proof to this type of Buyer that purchasing your business at your valuation expectation will allow them to achieve the IRR thresholds they are looking for is vital.  

How can I calculate this?

Here's a step-by-step summary of how you perform the analysis:

For example, if I want to sell my Company which has a £2 million value expectation, for simple terms let's say that an appropriate debt-to-equity ratio in the current M&A environment is 50 percent debt and 50 percent equity.  In this case, an acquisition of my business could be financed as £1 million in debt and £1 million in Buyer's equity.

What happens next?

1.  The first stage is to understand how the acquisition of your businesses will be financed, as this is pivotal in positioning your Company at an attractive IRR.  Talking to a finance firm, Bank or broker who specialise in M&A deals in your sector will allow you to confirm the current level of debt to equity which deals are being based on.  Once you have this information you can use this ratio and apply it to your value expectations to see whether they are realistic in the current market.  

2.  The next stage is to determine the forecasted sales, overheads and free cash flows of the business over the next five years, including the cost to service the debt amount used in the acquisition.

3.  Calculate the equity remaining for the Buyer assuming that the Company will be sold after five years at a conservative multiple of EBITDA (usually the same as the entry multiple).

4.  Use the initial equity investment determined in No.1 above, the free cash flows after debt servicing in No.2 and the equity remaining for a Buyer upon a subsequent sale in No.3 to calculate the potential IRR on their investment.

Hopefully, this analysis proves that the valuation of your business will earn your Buyers a return on investment in line with industry standards, or ideally a much more higher and attractive uplift. If not, you might have to reassess the reasonability of your valuation expectations. Effectively in this analysis, you have taken the Buyer's IRR and used it to your advantage, creating a ‘win-win’ scenario when negotiating a deal.

Valuing a Company is more common sense and financial calculations than science or magic, and of course every Buyer will value you differently, the key is to find the Buyer who will pay the highest price and effectively has the greatest need for the acquisition to occur.  If you are prepared to instruct advisors who know the market and how to tailor information for each individual Buyer, you can work toward getting the valuation you want.

Adam Croft, Senior Business Broker

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