Private buyers
Why won’t an adviser release an Information Memorandum?
There are many reasons why the adviser handling the sale doesn’t show you the Info Memorandum immediately on you showing interest in their client for sale (having already signed their NDA). For example:
- The seller might need to “vet” each buyer before agreeing to the release of the IM document
- The seller’s adviser insists on a new NDA being signed which slows the process down
- Private buyers are seen to have less priority than a trade or private equity buyer and so there is often a queue
- Timing as to how long the business has been for sale – the longer it has been on the market, the greater the chance of the IM being released to a private buyer
- The adviser could be very busy with the sale of many different businesses at any one time and so, he/she will need to “get round to it”. Often advisers are handling too many opportunities and therefore, don’t operate with maximum efficiency
- Private buyers are often seen to be unable to raise the necessary external funding to complete a deal
- Private buyers are often thought of as not being prepared to invest much, if any, of their own capital to make a transaction happen. This has been predicated in recent years by a number of companies selling courses on how to buy a company “with no money down” and this has created a general waryness on the sellers part, when approached by a private buyer
- General scepticism from the sellers and their advisers as to relevance of the background of the buyer in terms of fit with the target company sector/sub-sector
- The buyer’s ability to run a business of the size of the target company on a day to day basis can often be in question. This is often the case with buyers from a large corporate background, having operated in a senior capacity but perhaps without the “reach” needed to run a typical SME where the ongoing requirement is to “wear many different hats”
All of the above mean that a private buyer must be a little patient with sellers and their advisers and be prepared to accept that things might not happen as immediately as one would like.
However, by being a Valius member, there is an automatic level of assumed goodwill with sellers’ advisers which can, to a large degree, cut through a lot of the waiting time and therefore, buyers can “jump the queue” and receive the Information Memorandum as speedily as possible.