Turning the ‘one size fits all’ approach on its head
Within the company sales industry many brokers, investment banks and M&A companies often adopt a ‘one size fits all’ approach when it comes to structuring exit solutions for their clients.
At Benchmark International our philosophy is to turn the initial ‘one size fits all’ company sales approach on its head. With extensive levels of M&A experience within our organisation, we posses the knowledge and knowhow to tailor our clients exits to their needs and objectives.
Listed below is just a snapshot of the exit solutions available to our clients.
Cash in full on close deals are often achieved. Acquirers gain immediate ownership and sellers are happy as thereis minimum financial risk. An all cash dealis ideal if you are retiring or want an immediate exit.
Elevator deals are for ambitious sellers – ‘cash-in some of your chips and keep playing’. Such deals provide a mechanismto link the acquisition price of a companyto the potential future levels of its profits. The Sellers on-going involvement is required in order to drive and elevate future profits and value. This has the potential to truly maximize value and is ideal for companies in the infancy growth stage, young and ambitious sellers, and entrepreneurs.
This concept is exciting for those who have worked hard to build a companyand want to both de-risk and ‘keep ahand in the game’.
Performance Related Payments (PRP)
An initial consideration is made on close and then secondary performance related payments are made subject to certain performance caveats. You can maximize the deal by linking it to future growth and the buyer can ‘hedge’ risks and finance the deal from future profits.
These are effectively performance related payments, where the seller is expected to stay on and work to achieve the PRP through work on a service contract. The idea is that the seller has a financial incentive to help make a success of the company after the sale.
Modest retentions are often made by acquirers, against closed monies due, pending the outcome of certain specific events, typically an agreed level of assets on close.
Deferred and Contingent Payments
Deferred payments are fixed and carry interest at an agreed rate. They may be secured by acquirer guarantees and in some cases by bank guarantees. Contingent payments, or earn-outs, are often linked to the future profitability of the company. These can be risky and should be seen as ‘the icing on the cake’ for risk averse sellers.
A combination of two or more companies, resulting in the creation of a new entity.
When it comes to exiting a company, it is imperative that each case is considered based upon the unique circumstances of each business owner in order to ensure maximum value and satisfaction is achieved.
To find out more about the creative manner in which Benchmark International structure deals for our clients please give us a call today and book a no cost, no obligation meeting with one of our Directors.