Sell Side

Delivering Sell-Side Success for Private Companies

  • The sale of a company, division, business, or collection of assets is a major event for its founders, shareholders, management, employees, and other stakeholders.
  • It is an intense, time-consuming process with high stakes, usually spanning several months.
  • Sellers can rely on Cebron Group’s team of trained professionals to ensure that key objectives are met and a favorable result is achieved.
  • Cebron Group provides a comprehensive financial analysis of the various strategic alternatives available to the owner.
  • As sell-side advisor, we seek to achieve the optimal mix of value maximization, speed of execution, and certainty of completion among other deal-specific considerations for the selling party.

Sales Transaction Challenges

Once a business owner has decided to sell, navigating the transaction process can bring numerous challenges. Among them:

The next hurdle is the sale itself:

If a business owner wishes to manage price, can a high price be achieved through a one-to-one negotiation?

Or, must the owner pursue a broad auction process and risk possible confidentiality leaks and/or the reputational risk of having a wide sale process that ultimately may not be consummated?

Either option can become a complex, nerve-wracking game between seller and bidder that weighs the optimism of the owner against marketplace realities.

Buyers want to get a deal done at the lowest-possible price, while sellers are looking to leverage their after-tax proceeds from the transaction.

Understanding Deal Dynamics – What Drives Strategy?

Not only is preparation critical to the M&A process, but it’s also important to understand what drives the strategy behind a process, and the objectives of the parties involved. Ultimately, one company’s acquisition process is another company’s divestiture process. The essential issue is which party can dictate the process?

Ultimately, the answer depends on several central elements:

How attractive is the seller’s company to the market; and Which party, buyer or seller, has a greater compulsion to transact.

    – The strategy behind the design of any process is to maximize negotiation power.
    – As a seller, you will want to structure the process to maximize your leverage throughout, while the buyer will continually attempt to tip the balance of leverage during the transaction in their favor.
    – As a result, it becomes an antagonistic interplay between the buyer and seller, pitting motivations against each other.
    – It is precisely in this context that give rise to key commercial issues and tactics we often see in the M&A world
  1. For a seller, competitive tension translates into better terms and conditions for the deal.
  2. Therefore, most processes are designed to ensure that the seller has as many of the right bidders at the table for as long as possible as this is the surest way to maximize value.

  1. For the buyer, it is crucial to eliminate other bidders from the table as soon as possible and make the seller “stand still”
  2. The moment the buyer locks down a seller through an exclusivity agreement, negotiation leverage immediately transfers from the seller, to the buyer. Once exclusive, the buyer can commit resources to validate valuation and deal thesis.

  1. Despite having signed non-disclosure agreements, a seller of a private company is often reticent with disclosing confidential information, particularly with commercially sensitive information to a potential competitor given that there is always a risk that the deal may not be completed.
  2. Yet, greater disclosure of information by the seller produces more educated offers from the buyers, offers that accurately reflects an understanding of both the risks and the upsides of the business.
  3. As a result, the more “well-informed” the offers are, the lower the risk of re-trading by the buyer as the process moves along. It is exactly within this paradox of the risk versus the benefit of disclosure that we see phasing of M&A processes, where levels of disclosure are tiered to match the commitment and momentum demonstrated by the buyers.