Carving out a business is often more complex than acquiring one and selling a carve-out business requires a greater level of planning, effort and resources.
The Group, for historical reasons, may be operating into more than one business. Companies often carve out or spin off a business unit and redeploy capital raised to strengthen its core business.
Family-owned companies often divest for various reasons including next generation not interested in carrying on the said business or to fund their retirement .
HU Consultancy has extensive experience in divestment and sale of businesses. We provide complete support to our clients to ensure that value to the seller is maximized while risks and disruption to the each stage of the divestment process.
We, at HU consultancy, through our network of firms, have access to potential national and international acquirers.
Divestment, also known as divestiture, is the process of selling business, or liquidates a portion of a business or one or more of its strategic business units or a major division. Divestment should be proactive and not reactive. To realize fair value, the company should bundle assets (intangibles like patents or customer data) or liabilities (may be excluding contingent liabilities or legal cases) of business unit for which there will be interested buyers. The company should look at structures and mode of consideration to optimize net of tax cash flow and also win-win for the acquirer. Our multi-disciplinary team can provide support work out, appropriate mix of Assets and liabilities, structures and mode of settlement of sale consideration.
Matching the right buyer with the right business is a painstaking process and the transfer of business ownership is time consuming. Buyers are divided into two groups: strategic and financial. our team identify at least two to three potential buyers after screening internal and external data bases which can create substantial value . We arrive at list of prospective buyers only after having check on the seriousness and financial capability of the buyer.
Agreements required to be executed are pre-transaction like MOU and term sheet and post transaction like Share purchase Agreement, transfer of business agreement etc. Our legal team along with support from external attorneys prepares all agreements and documents required for the deal execution considering structure of the transaction (Assets Sale, Slump sale or hive off ) , legal compliance and permissions, mode of consideration, payment terms obligations and warranties.
Prospective buyer will carry out due diligence of business being acquired. We give full support to seller list out various data and documents to be provided before Letter of Intent (LOI) and post LOI and NDA. It is important to see that only relevant data are provided or given access for only viewing in data room to a buyer to arrive at the decision. We also carry out financial diligence of the buyer.
Valuation is an art. We work with the client to arrive at range of values which is fair and realistic considering various qualitative and quantitative factors. It also captures macro and micro factors, structure of the transaction and mode of payment.
To a client, selling the business typically means two things: parting with something extremely emotional and realizing the value of his or her most valuable financial asset. These incredibly high stakes make this type of negotiation entirely unique. We work with a client to arrive at Walk Way Number which captures not only the amount of consideration but also mode and time of payment and structure specific strategic concessions.
Once consideration and structure for transfer of a business is finalized, our legal team work with the client to comply with all administrative and industry specific laws , transfer of various registrations and transfer of employees . We also work out likely tax under income tax and indirect tax like stamp duty on the transaction how the same should be shared between a buyer and a seller.
Our experiences teams work with the client to rationalize and in the process of optimize returns from the remaining business. If required we also support client to optimise returns from sale proceeds of divestment.