FEBRUARY 2013 | HIRE
AND
RENTAL
NEWS
| 13
INDUSTRY IN FOCUS
By Richard van der Merwe, Fordham Business
Advisors
As the mood of ‘doom and gloom’
pervades the economy, everyone knows
this is the worst time to sell your business
(
or house, shares or other assets). But many
people don’t have a choice. Tough trading
conditions and pressure from financiers can
force owners to look to sell, even at ‘fire
sale’ prices. The alternative to a successful
sale may well be insolvency.
The largest barrier can be a distressed
owner’s perception their business (baby)
is worth a lot more than an objective
valuation. However this expectation gap
closes rapidly as financial pressures mount.
It is important a prospective purchaser
be in the position their offer (which may
well have been rejected) is well known.
This provides potential upside should the
business recover (if applicable) and provides
face saving outcomes for the current owner.
The absolute amount of an offer may be
low, but where the owner or management
have an ongoing role, the opportunity to
‘
win back’ losses through upside future
performance can be compelling.
It’s acquisition time!
Your offer may be seen as their last
resort. Be sure the door is always open. Be
also sure you know exactly what you are
buying. You may have to act very quickly
and you need to be absolutely sure what
it is you are buying, and what parts of the
business (premises, commitments, stock,
people) you do not want.
The logic for an acquisition offer
relates to the fundamental cost/volume/
profit drivers in a business. The ‘perfect’
acquisition would see the target move into
your (underutilised) infrastructure without
adding to your fixed cost structure and with
minimal integration cost, yet add their sales
and margin directly to yours.
While this ‘perfect’ acquisition can be
hard to achieve, there can be a range of
revenue (your goods/services and their
customers and vice versa) and cost (greater
volume discounts, duplicated expenses)
synergies that add to the outcomes.
Beware of negative synergies that can
arise where cost of the transaction, the risk
of under or over estimating outcomes or
the costs of integration spiral out of control.
Properly managed, good businesses
can become great businesses through the
opportunities provided during a business
downturn. Even good businesses sometimes
have to sell at an inconvenient time, such as
when an owner becomes sick or dies.
For more contact 03 9611 6066 or visit
www.fordhamgroup.com.au
HR
The NSW Business Chamber has released
the Termination Guide, an e-book written
by industrial relations expert Paul Munro,
to help business owners understand how
to protect their business throughout the
termination process.
The Termination Guide provides over 90
different reasons for termination, advice
on how to process a termination, tips on
performance management and more.
The Guide will also help businesses apply
preventative measures to ensure they are
not exposed to unfair dismissal claims.
Contact 1800 505 529 or email:
customerservice@workplaceinfo.com.au
HR
Termination
management