MESSAGE FROM THE PARTNERS
We have been seeing a lot of new buyers enter the market lately and with them, we are witnessing new challenges. The most predictable and pertinent is the issue of these new buyers funding the business sale/purchase.
New buyers in today’s market are typically exiting from the white-collar sector, they have strong commercial and transferable skills and at face value are seem to be strong buyers. The issue is, buyers are needing some degree of funding in order to acquire a business, which in normal circumstances would be fine, but in this environment, banks are saying no when they may have said yes pre-COVID!
We have seen Vendor Finance offers on the rise and predict these will continue to increase over the coming months. We know many vendors would rather listen to fingernails screeching across a blackboard than hear the onerous hum of the phrase “Vendor Finance”, so it will be interesting to see how Vendors respond. As always, when doing any deal with payment terms, both sellers and buyers will benefit from receiving objective advice by an experienced arm’s length facilitator.
There can be a lot to consider and there is of course risk which needs to be managed, though it can also be the foundation of a new kind of win/win transaction for everyone.
Regards,
The VBA Team
HOW TO MAKE SURE THAT BOTH
THE SELLER AND BUYER ARE PROTECTED
Now the deposit is sorted – the next stage in the sales process is due diligence (DD).
As always, it is best for all concerned to approach DD with structure and boundaries, which means setting up some simple ground rules to start off with.
DD is the most anxious time in the process for everyone, and a major cause of a sale falling over. Don’t let this be you!
The First Rule
Define the due diligence. We find the best place to start is to ask for the purchaser’s “wish list”. Both sides should agree:
What information will be provided?
The manner in which it is provided I.E. physical, electronic, on-site or off-site.
Where will the due diligence be conducted?
When will be conducted in the sales process? Some more sensitive DD may occur after contracts are exchanged.
The people that are involved in the DD process will also contribute to and require access to the information.
Once you have agreed on the content and process, you then need to set guidelines on the time frame... Read more
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