Do you have enough deal support as you prepare for sale?

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By David Jorgenson, CEO, Equiteq.

Preparing for sale and going through the sales process is time consuming and potentially a very distracting procedure. Interested buyers will demand huge amounts of information on an ongoing basis. And while you’re compiling this, you must also ensure that the day-to-day running of the business continues on its positive trajectory to retain value.

At the heart of the deal support is a finance director (FD) who is up to the task. The FD and finance department are of crucial importance as you will need someone who can stay on top of the hundreds of questions that will be asked during due diligence. If you don’t have someone like that on the team then hire in a contractor; treat selling the business like you would any other project and resource it appropriately.

As well as financial reporting, the FD will also need to keep a close eye on the visibility of booked work and the pipeline. If there are discrepancies between what is forecast and what work occurs, this raises concerns in the minds of investors. Is the consultancy disorganized? Is there internal confusion? Are different processes being used? The FD will need to be on top of the financials and forecast and be able to update the view of the future performance quickly, as this will be requested frequently when a company is being examined for acquisition.

The key performance indicators associated with tracking and forecasting performance also need to be readily available, as investors will want frequent sight of these. This would include figures such as individual and organizational profitability, utilization rates (both by consultant and overall) and project profitability numbers.

During the sales process, the extra work generated relies very heavily on the senior team. This is because they often choose to keep the fact that they are looking to sell the business confidential from most of their employees, as well as coordinate the supply of information. The FD clearly has a huge role to play, but it’s also important to clarify the other key roles and responsibilities. If a company doesn’t have an operations director, much of this work is likely to be picked up by the managing director. The sales director will also be key as they balance the capacity required to keep the business running – which is demanding in itself – with the additional work. By agreeing who will be responsible for what areas up front, it can make it easier for everyone to fulfil the requirements and also reduce the chances of anything being missed.

By treating the sales process as a project in itself and like you would a new piece of client work, you can make everything run much more efficiently. It is a demanding time, so resourcing it realistically will help smooth the path for all involved.

If you are preparing to sell your consulting firm and would like to discuss your plans, please get in touch.

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