Timing and planning are fundamental when considering a trade sale route for shareholders to release value or the responsibility of owning the business. The dramatic shifts in global and regional economic fortunes have made it extremely difficult for buyers to raise finance for acquisitions, or indeed to quantify the risks of sustainable revenue streams in their own businesses, never mind those of acquisition targets.

The timing issue has made it very difficult for anyone contemplating a trade sale in the expectation of a big payout, as prospective buyers and supporting institutions view risk more acutely and often business plans do not preserve or generate cash.

Building a strategically interesting business is therefore even more important in order to ensure you remain attractive to prospective investors and are not considered just part of a larger consolidation play from a competitor.

As such, it is essential you seek objective and independent advice from experts in your sector on the feasibility of achieving a trade sale. It will be invaluable in helping you understand how to maximise the opportunity your business offers to potential purchasers or point out why your business is not considered attractive by investors.

The essential questions are: ‘Why would a buyer find my business attractive?' and ‘Who are the likely acquirers and what value would my business add to them?'

Cash preservation
A large number of businesses in the litho sector are operating well below full capacity and, as a result, experiencing cashflow difficulties. And, while these businesses may be hoping to achieve or maintain a profit, survival through cash preservation is the byword in the short-term. The marketing of a reasonably profitable business in this economic climate will be made more difficult by the need for potential acquirers to be able to fund or justify their interest to investors, even if the acquisition has strategic value.

Companies that are not profitable and still trying to find an equilibrium with revenues and costs will find it difficult to realise strategic value above market asset value and consideration for ongoing order books, but, to fully understand what interest - and ultimately what offers might be forthcoming - a full marketing process needs to be embarked upon.

When it comes to finding a suitable purchaser, there are alternatives depending upon the business and the market it operates in. These include a sale to a MBO or MBI team, or a share purchase by the company.

In order to set things in motion, owner-managers need to have a complete understanding of their expectations and to make a comprehensive assessment of the marketability of the business to be sold. As with most decisions, the personal motivations of the owner will govern the timescale, the level of involvement and scope of the process.

Lack of preparation is the single-most important reason why more than 70% of businesses advertised for sale fail to to find a buyer. Don't compromise the value of your achievements or, through other factors beyond your control, be forced into a quick sale. ‘Be prepared' is an important byword in today's marketplace, and not just for Scouts.

There is a strong argument for running your business as if it is always up for sale, as this usually delivers better performance and is more attractive to potential purchasers.

The timing of the actual exit is extremely important as owner-managed businesses are often run to minimise corporation tax, which has the opposite effect when it comes to maximising price.

The grooming process identifies and delivers new efficiencies and value to your company in advance of the sale date. Last-minute ‘window dressing' will not seriously drive up sale consideration as any associated benefits will be discounted by the buyer in assessing price-earnings multiples.

Part of this process will include looking at the financial structuring of the business and its ability to improve or create better balance-sheet and profit-and-loss value.

Buyers are, not surprisingly, more likely to be interested in a business with a clear business plan and credible forecasts of increasing earnings.

Marcus Clifford is managing director of BPIF McInnes