Helping a Business Owner Retire: Our Step-by-Step Exit Preparation Work
Client
The client is an e-commerce business specialising in homeware hardware, predominantly locks and safes, with a product range catering to personal use, schools, and government offices.
Background
The business operates by reselling third-party products, particularly electronic keypad locks, while also offering its own line of combination and key locks. Its primary customer base includes schools and educational institutions, government organisations, and private enterprises.
Purpose
The client, in his early 60s, is looking to retire in less than a year with no succession plan in place because no family member can take over the business.
Challenge
As a family-owned business, the company operates with a lean management structure, with the owner playing a central decision-making role. This has made it difficult to gain a full understanding of the business. The process of collecting, organising, and consolidating the necessary data to assess and value the business within a limited timeframe proved to be a significant challenge.
There was no established system for inventory management, no stock management software or tools in place, and visibility into product movement within the warehouse was minimal. Financial information was not readily available in a clear or organised format. The existing accounting system was outdated and unable to keep up with the business's growth, making it difficult to perform a comprehensive financial analysis and complicating the process of sharing accurate information with stakeholders.
From a staffing perspective, while an e-commerce business may not be as labour-intensive as others, there was a lack of personnel with the expertise to manage day-to-day operations independently, which highlights a key area of concern for any potential transition or future planning.
Action Plan
As part of the valuation process, the team at Alexander Spencer examined four key areas:
Business-Specific Background – This included an in-depth review of operations such as the organisational structure, key personnel, internal processes, and any intellectual property (IP) held by the business.
Financial Assessment – The team analysed the financial health of the business, focusing on revenue, profit margins, assets, and the overall balance sheet.
Market Comparables – A review of comparable businesses within the same industry and size range was conducted to understand typical market value benchmarks.
Positioning in the Market – Finally, the team assessed where the business stands in the current market landscape in terms of value, based on its unique strengths and risks.
To ensure the right fit, the team gathered feedback from various market segments. These included investors specifically interested in e-commerce, those looking to acquire any profitable business, family investors, industry players, and entrepreneurs who admired the model but were expanding into different product lines. Some buyers appreciated the business model itself, regardless of the product or industry. As the team noted:
“Our goal was to collect feedback to understand appetite, valuation preferences, payment structures, and expectations.”
The entire process was handled confidentially. The team studied buyer preferences, their approach to the acquisition, and systems that would need to be implemented in the event of a takeover. This covered valuation strategies, proposed payment terms, and operational expectations.
Operational transparency was key. The team supported the business owner in capturing stock-related data, including available stock levels and inventory movement. As long as the data on stock and financials could be accurately tracked and managed, it was shared strategically with interested buyers.
They also collaborated closely with the business owner’s accountant to produce income and expense reports, sourcing information directly from bank statements to ensure accuracy and integrity.
To streamline the sale, the team developed a clear system and framework. This allowed the business owner to present inventory and financial data in a structured and professional manner. From a staffing perspective, a strategy was also developed to clarify which roles were to be outsourced, supporting future scalability and transition.
Above all, the process was customised around the business owner's goals. The team took the time to understand his personal and professional requirements without sacrificing the overall value of the business.
A standout element of the project was the business owner’s responsiveness and commitment to the process. This seamless collaboration was critical in ensuring the sale progressed smoothly and efficiently.
“He paid the invoice and answered the 29-question information memorandum questionnaire on the same day.”
Results
The outcome was better than expected. With stock levels and financials well-organised, easily accessible, and ready to be shared, the business attracted interest from potential buyers. The handover may have been a bit more complex, but it didn’t affect how much the business was worth.
Buyers were confident in what they were stepping into, and the owner was able to move forward knowing that the business's true value was recognised.
Services Provided
Capital & Transaction Advisory
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