How to prepare a management team for a trade sale in private equity – top tips
November 16, 2021
Preparing a management team for a trade sale in private equity can be a daunting task. Private equity firms are known for their rigorous approach to due diligence and can be demanding in their expectations of management teams during the process.
However, with the right preparation, you can position yourself for success and increase the chances of a successful transaction. Here are some top tips on how to prepare a management team for a trade sale in private equity:
Understand the private equity landscape
It’s important to understand the private equity landscape before entering into negotiations. Private equity firms often have specific investment criteria and strategies that they follow. Knowing what they are looking for and how they operate can help management teams prepare for negotiations and present themselves in the best possible light. Your corporate finance advisors should brief you about each firm you meet.
Create a strong value proposition
Your value proposition is key to convincing potential buyers of the value of your business. You need to absolutely crystal clear about your unique selling points so that you can create a compelling story that highlights the business’s strengths and potential for growth. This can include market position, customer base, intellectual property, and growth prospects. Every firm is different, and creating a clear, simple equity story is sometimes the toughest part of the sale process.
Develop a clear strategy for growth
Private equity firms look for businesses with strong growth prospects. By the time you meet investors you must demonstrate a clear strategy for growth. This will include plans for expanding the business, increasing revenue, and reducing costs. This growth plan will demonstrate to potential buyers that the business has a strong future and can deliver value.
Show a strong management team
Private equity firms are interested in businesses with strong management teams. Management teams should focus on building and showcasing a team with a strong track record of success and a diverse set of skills and experiences. This can help demonstrate to potential buyers that the business has a strong foundation and can continue to perform well after the sale. And remember, don’t just tell them how good you are. Instead show them how good you are.
Prepare for due diligence
Due diligence is a critical part of the trade sale process. Private equity firms will conduct a thorough review of the business, including financial records, legal documents, and operations. You should be prepared to provide detailed information and respond to questions in a timely manner. They should also be prepared to address any issues that may arise during the due diligence process. Never underestimate this part of the process.
Engage with advisors
Working with experienced advisors can be invaluable during the trade sale process. Management teams should consider engaging with advisors who have experience in the private equity sector and can provide guidance on negotiations, due diligence, and other aspects of the process. Advisors like Benjamin Ball Associates can also help prepare the management team for investor meetings.
Don’t forget to run the business!
It’s important that you also continue to run and grow your business during the trade sale process. The whole sales process will be exceptionally tough. It’s time-consuming and distracting. We can help you make it easier by working with you to create a compelling investor pitch and to coach the management team to have outstanding investor meetings.
To increase your chance of success and achieve a successful trade sale, call us. We’d be delighted to help you make your trade sale a success.
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