Background

My client, the owner of a London-based travel agency, had decided to sell up and retire. However, having been so wrapped up in the day-to-day running of his business, he’d not had time to plan his exit. He realised that this could result in a smaller financial return than he believed his business should realise.

The challenge

Our key task was to develop and implement a robust exit strategy for the business, to maximise the client’s return on investment.

What I did

First, we analysed the current business situation, using various methods to calculate the value of the business, which we compared with the owner’s expectations. As the business had few assets, the approach we chose was earnings-based valuation. Next, we flagged the company’s strengths and weaknesses and corrected the problems.

We then identified who in the marketplace was buying similar companies, which companies were being purchased by strategic buyers, and why. Did our client’s company fit that profile? Who was likely to be a strategic buyer? 

We made it clear that, regardless of our valuations, the real value of our client’s business was what a purchaser was prepared to pay and that a strategic buyer, in general, would pay more.

Acting as an intermediary, we then approached 25 potential buyers to gauge interest and solicit offers. Price was never stated.

Following the signing of confidentiality agreements and provision of details to interested parties, we collected letters of intent from serious buyers, and made them aware that others were also bidding.

The most promising buyer was selected and it was announced that their letter of intent had been accepted.

The outcome

Following in-depth due diligence and the negotiation of a definitive purchase agreement, the deal was signed and closed. The process took approximately three years and the final price exceeded the owner’s expectation by 28%.