Video 18 – Should You Disclose Any Known Business Issues To Your Buyers?

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Rob Goddard:

Disclosure, what do you say and what don’t you say and when do you say it to a buyer? In about 60 seconds.

Steve Barry:

In 60 seconds? Do you have to tell a buyer about potential issues in the business? Yes. Because they’ll only find out anyway. But you need to think about when you disclose the information. It may as well be something you can fix upfront, in which case you can fix it before you have to get to the issue. If it’s something that could have an impact in bearing on the perceived value of the business, it’s going to come out at some stage in the due diligence anyway, so it needs to be dealt with.

Steve Barry:

There is a point, probably, when you’re progressing through the meetings and trying to fine tune the relationship where you would need to draw their attention to things, which might be things in need of improvement for the future.

Rob Goddard:

And if you’re not sure whether something should be disclosed or not?

Steve Barry:

If in doubt disclose would be my view.

Rob Goddard:

Yeah.

Mike Whittle:

Yeah, I think if in doubt ask us. We’re there to help. I think I would say, as Steve said, everything will come out, so there isn’t anything to be hidden. And I don’t think that’s ever the intent of any of our business owners anywhere. I think what I would say is make sure that if there is something that needs to be explored in more depth, you’ve created and understand the narrative that sits behind it, because you’re going to have to explain it to someone in terms that make sense to you as a business and that they may understand as well.

Rob Goddard:

Yeah, of course you had a few outages but another one comes to mind. Be sure that your sins will catch you out. He’s smiling there.

Steve Barry:

I am.

Rob Goddard:

But things that you’ve done, not necessarily sinful, but things that you’ve done that perhaps an acquirer is going to raise their eyebrows. Take advice. That’s why you need a properly qualified advisor walking you through this process to say position something in the right way, at the right time and certainly before they made an offer. Because otherwise, if you leave bad news until after an indicative offer has been accepted, they will have the right to chip on price.

Steve Barry:

They’ll slash the price.

Rob Goddard:

They will slash the price-

Steve Barry:

Or walk away.

Rob Goddard:

Or walk away. Yeah.

Mike Whittle:

Okay.

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