We like to think we always enjoy our work. But sometimes we get to do something we really enjoy. Take for instance when we recently had the opportunity to sell a chocolate factory, (and eat lots of dark chocolate in the process…)
The business owner and his family had worked hard to build a very successful business in the space of only 15 years. He had been so successful in fact – having cornered around a quarter of Australia’s industrial chocolate market – that he had garnered serious acquisition interest from several multi-national food giants.
We were honoured for him to entrust us with running the sale process from the get-go. But this was on the strong caveat that, in his words, ‘we didn’t stuff it up‘. Like most people in his position, he was also keen to wrap the deal up as quickly as possible – after all, these life-changing opportunities don’t come around every day.
When dealing with large companies (and there are a fair number of zeroes on the price) they will generally look to railroad the smaller business owner. This is usually done by an immediate request to ‘go exclusive’ coupled with a lengthy due diligence period, which is exactly what each of our prospective purchasers politely demanded.
The effect of these two working in tandem is to prevent communication with other prospective purchasers, while also granting the purchaser an open-ended ‘get out’ option (often months down the track). This gives the purchaser an upper-hand and could also cause the other prospects to drop out of the race, exposing our client to being ‘low-balled’.
We weren’t about to let this happen. We crafted our first communication to each prospective purchaser to clearly outline that the deal was going to be run on our terms. By seeing who genuinely engaged with our clearly outlined process, we were quickly able to separate the best potential purchaser from the rest of the pack.
After some promising communications and a meeting at the factory in the outer suburbs of Melbourne, our client decided it was time to get serious and grant exclusivity. Rather than hand over the keys to the factory at that point, we put in place a stepped exclusivity and due diligence criteria. The key to this strategy was that exclusivity ended if the purchaser missed a milestone along their due diligence path.
The due diligence then began. Within no time we had over 60 professional staff (from a big four accounting firm and a top law firm across three countries) firing questions at us and our client’s very capable accountants. We had negotiated the due diligence period down to two weeks, and through lots of hard work, we managed to satisfy the purchaser during this short period – more of a testament to our client’s business than us!
We had provided drafts of the share sale agreement and other transaction documents (there were many) to the purchaser shortly after granting exclusivity. Together, we were able to agree on most of the contractual intricacies by the end of due diligence. This is the benefit of running the due diligence process in parallel with the contract negotiation. It was time to meet face-to-face to nut out the final purchase price and other big-ticket items.
Two of us met with a large contingent acting on behalf of the purchaser in Melbourne. After two exhausting days of negotiations, we struck a deal that everyone was happy with. All parties signed the sale contract the next day.
There was still much to do in the three weeks between signing and settlement. But having planned for completion since we took on the job, we were able to coordinate each party to achieve what was needed in this short time. All that was left was to attend Completion and pop the champagne!
And that was it, deal done and cash in hand, all in less than three months!
Think we have made the deal sound easy? That’s because we have – the stresses of these deals should be ours to tackle, not yours. If you have a life-changing deal that we can handle for you, please call us on 1300 654 590.