Company sale process


This article will focus on the rather specific topic of selling your own business. Several practical tips on the practice of selling large and small telecom operators in Russia are formulated in one piece. So let's go.

The process of selling the company can be divided into two stages:

As a rule, the owner is guided by far from financial motives to make a decision on the sale of telecom business and asks questions like:

However, all these questions prevail only before dissatisfaction with the business profitability does not begin to outweigh all the doubts of the owners and moral issues. That is why the sale of a business is nothing more than a voluntary and, at a specified price, a change in the owner of an asset at a specified price, which brings profit. This is a classic business sale scheme. But besides her, there are other equally interesting options.

Options deals

  1. Classic purchase and sale. It is very common in telecommunications and other industries using financial leverage, which is necessary to increase the financial efficiency of an asset. For example, how it is done. 100 million on the deal involved in the bank. Own funds for the transaction is sent, say, 50 million. Thus, the efficiency of own funds increases significantly.

  2. Calculation by other securities is also possible. Such schemes are rarely used today. Most often resort to the bill transaction.

  3. Calculation of assets or liabilities. It often happens that a company is bought at a conditional price of 1 ruble. Such companies are in debt, and the new owner assumes all obligations for payments. In telecoms, in times of high traffic prices, they often resorted to a scheme of shipment of traffic in debt. In the future, the uplink of such a client was also redeemed for debts.

  4. Calculation of shares and further accession to the buyer. Such transactions are already made at a high enough level.

  5. Attracting an investor or investment. This may be a loan from a friend, financing secured by property or a share of the borrower. Also, the investor can be included in the share with the granting of powers when making decisions. The larger the loan amount, the more authority is granted. In a sense, such a transaction is similar to buying and selling.

  6. Self-purchase - that is, a decrease in investments and a sale of balances along with an increase in payables. Along with this is increasing dividends. In telecommunications, this scheme is not yet quite common, but companies in decline have already got accustomed to this option.

When it's time to sell

The picture above shows a typical picture of the life of any company. Time to sell business comes most often when opportunities for further growth are exhausted. If you miss this moment in the life of the company, then there will be a transition to aging. In order not to miss the moment, it is necessary to carefully monitor the profitability and value of the company, as well as prepare alternative solutions. Behind the point of maximum possible growth begins to fall in value.

Therefore, the ideal moment of sale is the heyday, when the operating profit grows, clear money is invested in development, which gives a clear and considered digitized result. At the same time, there are adequate and well-developed alternatives.

It also happens that there are no developed options, and dividends are accumulated on deposit accounts with a yield of up to 10% in rubles. Nevertheless, despite the preparation of the second component for decision-making, the first point - the sale of the company on the growth and at the peak of demand for the company in the M & A market remains the most important.

Who and how companies are bought today in the Russian Federation

Approaches to valuation and to the transaction of the main buyers in the Russian Federation

Presale preparation

First of all, you need to monitor the life cycle of your company and whether there are development options. It is worth having in stock various options for going out of business.

It is important to start creating conditions for interest from outside. Estimation and allocation of EBITDA, rebuilding the management accounting system are necessary. Investors and buyers are most interested in information on the company over the past year compared to last year, and better in monthly and quarterly breakdown.

After the first negotiations, the potential buyer will be interested in the last three years of the company's life. It is necessary to prepare the entire income of the owners, including leasing cars, working relatives, the salary above the market to individuals close to the owner, the so-called flows to contract organizations and so on. We prepare consolidated reports for a group of companies, if there are audit reports, prepared basic documents, in the original electronic form and scans.

A plus in your favor will be a ready-made business plan for the development of the company. If possible, you need to increase the investment attractiveness. By completing the above conditions and a number of others that can be found in popular business publications, your company will receive additional points in the eyes of a potential buyer.

Potential buyers are important to show the implemented projects aimed at increasing revenue. For telecom, an example would be: call-center modernization by introducing a new CRM / ERP, thereby reducing staff, increasing productivity, and increasing EBITDA margin).

It is important to “conjure” with the scorecard. Minimize the factors that could adversely affect the price of the company. These are tax optimization, internal and vague flows, the cultivation of credit debt, the discrepancy between the provided figures of official documentation or the inability to confirm the figures stated in the management reports and figures will be reflected in the proposal.

When negotiating with potential buyers, it is important to enter into non-disclosure agreements about the company that you provide. You should not go to potential buyers on the principle of “familiar friend”. Negotiations should be with officials.

Help should pick a qualified assistant. In practice, unscrupulous brokers are often found who care only about their own promotion in the network, and not about the result of a particular client. Such “professionals” often merge information in the media, which creates a lot of problems for both the buyer and the seller. All this has repeatedly led to the disruption of the transaction.

The same applies to the choice of a consultant. You should not give this work of preparing for the sale to the director, financiers, accountants, lawyers, because these "swan, cancer and pike" will not drag your cart there. They have their own interests, and they do not always coincide with the desire to be dismissed or replaced after a change of ownership. Any change of ownership is stressful for the team and may result in the loss of space for any of them. At the same time without the coordinated work of all of the above in a short time to provide all the necessary reporting to the buyer will not work. However, it is worth being prepared, if not to sabotage, then to delay, on the part of their managers, to perform non-standard tasks related to the provision of information during preliminary negotiations and even more so the audit.

It should be noted separately that the above recommendations work on the classic "market" in every sense of the word. The same rules for the sale of services, or goods, but with the nuances of the most sold product and the rules of negotiation and tactics. And no one cancels the auction!

Fortunately, the M & A market of telecommunications companies in the Russian Federation, like the industry itself, remains fairly high-tech and fairly clean, where it all works.

Prepared by: Anton Tsareff.


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