We asked the team at Kaizen to explain how they saw how an FFD could help business owner(s) looking to sell or get investment for their businesses. Here are the answers they gave to the important questions many of you are probably asking yourselves when it comes to an exit strategy, sale preparation and execution. We also asked how an FFD can make it easier to obtain vital growth and investmenty funding. The answer in all cases it would seem is to look at the help a Fractional FD can bring you!

Question(Q): How do you prepare for exit or investment in a owner managed business today?

Answer (A): Making a business ready for exit or investment isn’t easy. But by introducing an FFD you can make the process more straightforward. Preparation is key when it comes to exits and investments and being ready is built up over time through attention to detail, accuracy and good decision making. An FFD can help bring you that objectivity, helping businesses understand where value and risk exist. By making sure any preparation work is done properly, exits and investments become real options not stressful events.

Q: When should you bring in an FFD?

A: The Kaizen Team strongly advocate you bring in an FFD as soon as you can.  If you are wanting the best exit sale value you can get and want to attract the right buyer plus someone who will carry on the legacy of your business an early appointment is essential. If its additional finance or help you are after, then you want an investor you know you can work with. To maximise the chance that these outcomes will happen you have to give yourself the time to repurpose the business in a format that is saleable and attractive to somebody else. You’ve got to create something that someone can buy into and a business for the future, one that has the ability to perform and grow.

Q: Why do you need an FFD to help with investment?

A: Many businesses realise with growth comes the need for top-tier financial guidance. And that’s what an FFD can bring to your business. Investors think in spreadsheets, as opposed to an entrepreneurial owner who often runs a business on gut feel and what’s in the bank a lot of the time. That approach is not going to get you the investor you are looking for. If you get your finances and financial data in order it’s going to add to make investment capital easier to find.

Q: What will a FFD bring that we don’t already have?

A: Whatever the deal, be it a management buyout, a private equity sale, a trade transaction or a bank loan – each needs to be approached slightly differently. In each case there is an underlying need to make sure the “books” are as tidy as possible, because the moment you open them to someone else, any messiness, inaccuracy or skeletons will be noted. You need to make sure you understand every number and that there’s nothing hiding that will catch you out. You need to take a risk assessment approach and that’s where we believe an FFD can make a difference. Even if you’ve got an existing FD it’s good to have a fresh pair of eyes and use somebody who has a lot of previous experience. As a business you will be be challenged on your numbers. You might have done things the same way for years, an investor or purchaser is likely to come in and have a different opinion. Having a fresh perspective, someone looking at something from a different point of view is often what’s needed and an FFD can bring you that.

Q: What will a buyer or finance partner be looking for?

A: The finances need to tell the story. They need to give a potential investor a perfectly clear look at where the business has been and the direction it’s heading in. For you it’s a case of looking at what’s happened, for an investor or a buyer, it’s where are you going? They want to really know the business in detail. Who are the management team? Why is the sale or funding happening now? Discovering a hidden issue mid-way through a sale or lending application is painful for all parties. Any entrepreneur can tell you all about the way they run the business, but it must go beyond that, can you back up your knowledge with data? You need to start creating the historic proof that you have  the processes that a successful business needs, you’ve got future profit capability, and things like positive cashflow. Because a buyer and an investor, are going to be looking at how they’re going to get a return.

Q: We want to exit the business as soon as we can, how can we do that?

A: Our FFDs come into an organisation to look at what they can do to contribute to its growth now or in the future. Anyone who buys or invests in a business doesn’t want it to just plod along; they want to grow it. Current business owners often don’t have the appetite or the desire to grow their business any further and that’s why a lot of people look to exit. You hear about a lot of businesses where everything revolves around the founder. They have all the main customer relationships, they hold all the knowledge, they make the big deals. If they go, the business struggles to exist. We can help with succession planning, decision making and responsibility. Transferring responsibility to remaining employees and changing decision making processes takes the emphasis off the current owners.

Q: How much work is needed to get a business ready in these situations?

A: To find real value for all, big decisions need to be made and that means devoting a lot of time to getting things ready, it’s here where the assistance of an FFD can be beneficial. The FFD comes in with a fresh perspective. Crucially, having that spare pair of hands frees up time for the rest of the senior team to pay attention to areas that need attention. An exit or an investment strategy is normally a very extensive bit of work that sits on top of the everyday needs of the business. Bringing in an FFD will take that extra work off you, it can be especially good if you’ve got a less experienced Finance Manager, FD or CFO in post.

Getting a business to a point where it’s investment or sale ready takes time and effort, both of which can be less stressful with the help of an FFD. Be it telling a story with the numbers, bringing an objective approach to proceedings or adding value, there’s a part for a Fractional Finance Director to play. If you want to learn more about how we can help you sell your business or find the investment partner you need then simply arrange a no fee, no obligation consultation now by calling us on 01482 772261 or emailing info@kaizengroup.uk

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