Frequently asked questions

Most businesses are saleable. Areas where difficulties arise are loss making companies, those in terminal decline and those where all the information is held, and work is carried out, by the owner.
It is unlikely to sell within 3 months and most likely it will be 6 months to a year but it can often be longer, particularly if during the selling process there is an unexpected event or a past issue comies to the current management's attention, which can pause the process.
There are many options which can include existing management buying the company, maybe with outside assistance, another business or high net worth individuals. It is normally tax efficient for this to be a share sale but sometimes the assets of a company are sold. The Diverco free initial consultation would cover the various options.
MBI (Management Buy In) is where a manager or management team is brought in from outside to buy the company and manage it.
That is where the existing management in the business buy the business from the current owners. The acronym stands for Management Buy Out. This often does not release the seller from the responsibility of the company and often remains with significant sums of money owing to the seller from the company
This is where somebody from outside the company buys the company with the support of some of the existing management and the acronym stands for Buy In Management Buy Out.
The right time is when the owners for whatever reason have a desire to sell. There is no other right time. There are however the wrong time to sell a business. This would be when the outlook for the company is anticipating lower sales or reducing profits. Never try and sell a company when it is peaking in performance as inevitably it will have gone over the top either by the time you decide to sell or have interested enquirer's.
Yes it is. Diverco ensure that the initial documents to entice purchasers cannot identify the company. Detailed information is only sent out to those interested parties who have signed a non disclosure agreement and we ensure that there is a confidential means of communication between Diverco and the seller.
An NDA is a non disclosure agreement, which is signed by an interested party seeking additional information and restricts the use of the information purely for acquiring the company and cannot be disclosed to other parties other than their advisors.
Yes. Most companies will have a list of companies or individuals they do not wish to sell too and these companies will not be contacted. In addition, most clients like to see the details of companies who are showing interest and have signed a confidentiality agreement (NDA) prior to any detailed information being sent to them.
This is the Information Memorandum which covers the history of the business and its current position with some financial information and the reason for selling, but does not contain important confidential material such as customers. It is sent to interested parties who have signed an NDA.
Yes you do, but you would expect us to say that. The reasons are that the seller needs to concentrate on running the business and not be over diverted in selling the business. He/she will have an idea of some of the people who might be interested in buying the business but this is normally limited to suppliers, customers, friends and competitors and by no means exhaustive. The seller is also not able to contact other possible purchasers on a confidential basis and then also has the difficult negotiations on price and structure of the deal. Selling a limited company is complex.
Whilst for some businesses there will be an obvious purchaser. In the majority of cases we find that with Diverco the ultimate purchaser is unknown to the seller prior to putting the company up for sale.
It will be important to have a specialist corporate lawyer who deals with mergers and acquisitions, but they are not normally required until an indicative price has been agreed with a purchaser, but a number of deals fail because of non commercial lawyers. Also, an accountant is likely to be required to ensure the sale is tax efficient.
All Diverco's Regional Directors are highly experienced sellers of companies. Most of whom have bought and sold their own companies.
The first step would be to make contact with Diverco who will arrange a free confidential consultation either on or off site with a Regional Director who would quickly gain an insight into the business.
An analysis of likely purchasers is carried out and the teaser document is sent to them as well as being sent to the extensive data base of possible interested parties.. Also the teaser and extracts are advertised on specialist sites.
This is normally a short paragraph to elicit enquiries from interested parties but the company for sale cannot be identified.
No we don't. Whilst we are obviously willing to discuss with the seller the likely offer they are likely to receive, the actual price will depend on the buyer.
There are a number of different ways and there are a number of factors that are taken into account in the valuation of the business. The most likely will be based on the recent yearly profits, adjusted for any exceptional receipts or payments. The value would be affected as to whether the company is growing with the improving margins or is static or declining. This will be reflected in a multiple and will depend on the sector and size of the business and goodwill. Added to this will be any surplus assets which could include land and buildings, surplus cash or excessive working capital.
In most cases, this is not necessary as the purchaser will have their own plans and ideas. It can also have a disadvantage in that a purchaser may insist part of the purchase price is dependent on achieving targets. However, for your own internal use we would encourage it.
Most often part of the purchase price is not paid at the time of completion, but is delayed for a period of time and maybe dependant on the company achieving certain results in sales or profits.
This is where the purchaser will be asking detailed questions what is termed Due Diligence in order to understand all the issues within the company and it will cover commercial, legal, financial, tax. It takes the form of a number of pages of these questions seeking information which have to be fully answered by the seller.
Heads of Terms is normally a signed document by both purchaser and seller and outlines all the key points that will be in the contract and will include the intended purchase price and structure of the deal. It is important to get as much agreed information into this as possible, although it has little legal bearing.
These are guarantees given by the seller to the purchaser covering various matters and whilst they might appear quite onerous, the seller in considering them needs to assess the likelihood of a claim.
This is the formal response to the Due Diligence enquiries bringing to the attention of the purchaser any items that they need to be made aware of that happened in the past. By disclosing these facts, the purchaser cannot then claim on them should a future event arise with regard to them. In some cases a disclosed item will not be accepted by the purchaser.
This is where part of the price paid is dependent on the company achieving certain results in order to ensure that the management who needs to be retained for a handover period is committed to developing the business within the new company.
We assist the seller right the way through the sale process up to and including completion.