For many business owners, the hardest part of exiting a company isn’t finding a buyer, it’s deciding on the right time to sell.
Sell too early and you risk leaving value on the table. Wait too long and market conditions, business performance or personal circumstances may alter the outcome.
This was the exact position faced by the shareholders of an established SME who approached us for guidance. They had built a successful business over many years and were beginning to consider their long-term future, including retirement and succession planning.
The shareholders had built a strong business over many years and had begun considering their long-term plans. However, before moving forward, they needed clarity on some key areas, so before embarking on the sale of their company, they wanted clarity on three critical questions:
- Is the business actually ready for sale?
- Is now the right time in the market?
- Would the outcome achieve our personal and financial objectives?
To answer these questions, the shareholders undertook the MGroup Business Exit Review (BER), a structured strategic assessment designed to help business owners make informed decisions about an eventual exit.
Step 1: Identifying the Right Exit Route
One of the most common misconceptions among business owners is that there is only one way to sell a business. A key part of the Business Exit Review is identifying the exit option that best aligns with shareholder objectives. We assessed several potential exit routes, including:
- Trade Sale
- Private Equity Investment
- Management Buy-Out (MBO)
- Employee Ownership Trust (EOT)
Each option was evaluated against the shareholders objectives, likely deal structure and timeline.
Our analysis showed that while an MBO could be explored in the future, the shareholders’ objectives aligned most closely with pursuing a strategic sale to a trade buyer or private equity backed acquirer.
Step 2: Understanding Market Demand & Buyer Appetite
Timing plays a critical role in any successful business sale. The BER process looked closely into the market conditions, sector dynamics and acquisition activity in the sector.
Our research identified several encouraging signals:
- Strong post pandemic recovery across this market segment
- Increasing demand for premium solutions in the sector
- Active strategic buyers seeking growth through acquisition
These insights indicated healthy buyer appetite and a favourable deal environment for well-positioned businesses in the sector.
For shareholders, this insight was critical. It provided reassurance that they were considering a sale during a period of genuine buyer demand, rather than reacting to short-term market noise.
Step 3: Realistic Valuation Insights
Another key benefit of the BER process is helping business owners understand how buyers are likely to value the business. Using sector benchmarks and detailed financial analysis, we assessed the valuation dynamics likely to apply in this market.
Typical market multiples were between 3x-6x EBITDA. Given the variance in financial performance over the last 3 years, it was explained to this client how views on sustainable EBITDA might vary between different acquirers
The business also presented several attractive characteristics which we were able to suggest would drive value for potential buyers including:
- Diversified revenue streams
- Strong repeat customer relationships
- An asset-light operating model
- Opportunities for operational and margin improvements
These factors created a compelling strategic acquisition opportunity for the right buyer.
Step 4: Strengthening the Business Before Going to Market
While the review confirmed the business was well positioned for sale, it also highlighted several practical improvements that could further strengthen buyer confidence and support a smooth transaction process.
These recommendations focused on four key areas.
Sales and Growth – focusing on increasing average job value, prioritising higher margin opportunities, promoting bestselling products
Operational Improvements – strengthening collaboration across teams, introducing training and mentoring programmes to deepen the management team, improving reporting
Financial Readiness – financial reporting improvements, maintaining revenue growth, strengthening cash flow management
Legal Readiness – filling any gaps in corporate structure documentation including Statutory books and historical share transfer event, update Terms and Conditions, bring supplier and client contracts up to date
These improvements would help ensure buyers view the business as stable, scalable and ready for a transaction.
“The BER didn’t just show us what the business was worth, it showed us how to effectively position it to buyers”
The Outcome: Entering the Sale Process with Confidence
Following the Business Exit Review, the shareholders concluded that market conditions were favourable, the business had strong strategic appeal, and there were active buyers in the sector. While some operational and financial improvements were recommended, these were practical enhancements rather than fundamental barriers to a transaction. As a result, the shareholders decided that now was the right time to pursue an exit and begin the sale process.
Equipped with our deep understanding of our client and knowledge of the market, we will now be producing compelling marketing documentation in the form of an Information Memorandum that helps position our client as an attractive opportunity for the range of strategic buyers we will build in parallel. We look forward to speaking with acquirers in due course and negotiating a transaction that aligns with the Shareholder objectives.
“After more than 35 years of building our business, exploring a sale was a significant and deeply personal decision. It was essential that any advisor understood not only our market but also the culture and values that define our company. Geoff and The MGroup Corporate Finance quickly demonstrated a deep understanding of both. From the outset they approached the engagement with professionalism, insight and genuine care. Their Business Exit Review Report was particularly impressive, clearly identifying the right type of buyer and the value within our organisation. Throughout the process, they provided the experience, credibility and strategic perspective we were looking for in a trusted advisor.”
Are You Thinking About Selling Your Business in the next 2-3 Years?
Early preparation can make a significant difference to the outcome. The MGroup Business Exit Review will help you understand your options and value, assess timings and prepare for a successful exit.
Speak to our team to learn how the MGroup BER process can help you prepare your business for sale. Contact Partner, Geoff Pinder by email for a confidential conversation.
