Exit is a stage in the business cycle that is eventually unavoidable. Strategy is a crucial step in helping realise a business's true value.
The exit from business, for many owners, is their last chance to make the most of their years of hard work so getting the strategy right is critical. For the serial entrepreneur, every exit is the opportunity to extract value.
Creating value in this area calls for an understanding of business valuation. Our professional background in chartered accountancy consulting allows us to identify the parts of your client's business where value can be optimized. We then develop strategies for them to realize this value as part of an exit transaction.
Our intimate involvement in the commissioning of the MGI Private & Family Business Survey 2007, which covered more than 5,000 NZ businesses, has given us a complete picture of the circumstances impacting on business owners. With this knowledge, we developed a range of exit options to suit each client even in an environment of greater supply than demand. With our help, your clients can sell their businesses for the best price, and achieve the lifestyle they always wanted.
In 2006, Grant was a part of ground-breaking research conducted by Australasia’s foremost authority on succession planning, Prof. Kosmas Smyrnios of RMIT University. This research was reported in the MGI New Zealand Private & Family Business Survey 2007. One of the major findings, and the greatest cause for concern, was the reality confronting business owners:
“83% have indicated their intention
to retire in the next 10 years.”
This creates a stampede of owners trying to sell their businesses. Such an over-supply could seriously challenge the ability of business owners to achieve the value they want for their businesses, unless, of course, they are “Investor Ready” or exit ready.
In response, Domain Associates developed “Investor Ready” to combat the looming threat.
You may have noticed many business owners putting off selling or retiring until the global economic recession passes. This means that over-supply will be compressed into a narrower window, which accentuates the problem. With Domain Associates, your clients won’t have to defer their exit, so they can start working towards their chosen lifestyle right away.
Even an owner who feels fit, active and healthy at the traditional retiring age will still need to be investor ready, to be able to take advantage of unforeseen opportunities and be ready for any eventuality.
Investor Ready Program
In modern business there are a bewildering number of best practices, legal requirements and standards. You'll have found that to an owner-managed business some of these seem unnecessary at times. However, when it comes time to sell, these procedures, practices and requirements can become critical in the eyes of a potential purchaser.
Accordingly, it pays to be prepared for the purchasers' or successors' due diligence process, to enhance business value and smooth the way for an exit process. Domain Associates have developed a comprehensive investor ready program, which covers the key areas of a business. This serves as a business health review for your clients to implement before starting the sales process.
Investor Ready Service
A change in ownership is a decisive step for any business proprietor. With twenty years of assisting our clients through this process, we have developed our unique Investor Ready Service.
The Investor Ready Service is designed to ensure a business capitalises on its strengths and opportunities, and identifies and builds on its unique characteristics. Our initial work will give you a simple report which identifies the key areas in a business where additional value can be extracted.
We then work with our clients and key staff to ensure the business benefits from the strategies being implemented. A strong, vibrant business will weather ownership changes with ease.
To assist your clients in making their businesses ready for investment we tailor a plan from our 21-step Investor Ready Program that includes:
Strategic financial analysis
- the preparation of strategic/business plans;
- strategy development workshops;
- implementation of corporate governance strategies;
- performance reporting;
- sourcing of debt or equity investment.
In an age of increasing attention to corporate governance, it is critical that your client's management has the right information at the right time. Our reporting package includes a ‘dashboard’ of key performance indicators in a concise reporting format with an emphasis on ‘early warning indicators’. These cover both financial and non-financial aspects.
For clients looking to sell or retire from their business, our reporting package will ensure all performance indicators are actively managed towards their targets, and governance issues are taken care of. Prospective investors will appreciate the concise information the client can provide using the ‘dashboard’.Transaction support
Domain Associates expertise can help guide and facilitate a business through major equity or funding transactions.
Depending on the nature of the transaction, we can help a client prepare prospectuses, offer information statements and memorandums. It is critical that these documents satisfy all regulatory requirements and adequately represent the opportunity to investors or acquirers, while at the same time safeguarding intellectual property.
We work closely with clients, and their trusted businesses advisors, like you, to adopt the most appropriate corporate structure for a business, and to navigate taxation exposure. Your clients can enter into any transactions confident in the knowledge that all documentation has been properly drawn up and presented.Disposal/Divestment
The sale of a business is usually the biggest financial decision an owner will make, and it’s important to get it right. Typical considerations include:
- price optimization;
- minimal business disruption;
- limitation of due diligence;
- continuation of the business; and
- employees’ morale & motivation (post deal).
Domain Associates’ advice will help shareholders of private companies make the most of the sale of their shareholdings. Since each business situation is unique, we adapt the sale process to suit each client’s particular circumstances. Domain Associates provides tailored strategies to help maximise shareholder value while minimising business disruption.
As members of Mergers & Acquisition Professionals, our team will assist clients through all stages of the sale process. Our international networks of more than 200 offices worldwide also means we can provide an extensive network for global businesses.Valuation
We have considerable experience in business and share valuations and can assist with:
- transactions involving the acquisition or sale of businesses and/or assets;
- succession planning;
- debt and equity raisings;
- group restructures;
- dispute resolution.
Produced in accordance with the proven Economic Value Added methodology, not accounting profit, our valuation models should be an essential ingredient in your clients' transition decision making. Succession Planning
Succession Planning has been a hot topic in recent years with the oversupply of baby-boomer businesses. Succession is often referred to in the context of generational or parent-to-child succession. In reality, only 13% of businesses make it to the third generation, because business thinking and approach can be fundamentally different between generations. However, with clear strategy and supportive planning, the strengths that generational businesses have can be used to their best advantage.
Our specialist expertise in this area has been drawn upon by newspapers and periodicals aimed at equipping people with understanding. Domain Associates can help plan business succession, and bridge the generation gap successfully.
Governance is about keeping management ‘on point’ and focused on the execution of a business strategy.
There are two main areas where we can help your business maximize its value:
- achieving separation between strategy and implementation within small-medium businesses that have commonality between the board and management, and
- maintaining dedication to that strategy under the pressures that assault the business.
A board can help a growing business maintain accountability; it’s the lighthouse that steers a business clear of the rocks. Domain Associates have a holistic approach to governance that can minimize the value erosion of your clients' businesses and maximize the effectiveness of their business strategies.
MGI NZ Family & Private Business Survey 2007