Sent: 27-03-2006 07:37:29
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True Value - Tony Crilly
It occurred to me this week as I used my office door key marked “true value”, that our clients are after the “true value” of our services. It is all too common for us to provide a set response to a client enquiry which we perceive to be marked “true value”. This is not always how the client receives the message.
My topic in recent weeks has been focused on business succession.
The initial explanation of a buy/sell agreement includes the requirement that there be a disposal mechanism coupled with an acquisition mechanism.
The “true value” found in the transaction is not in the document or the explanation, it is in the solution that can be found to the real issues identified in the process. This solution may include any of the following:
- Finding a platform for rational discussion between equity holders
- Obtaining independent financial advice as to the value of the business
- Negotiating the agreed exit of a proprietor
- Obtaining a suitable method for calculation of the equity on exit
- Reaching agreement about the terms of ongoing management for the company
- Determining the method by which further parties are to join the business and how the exit of the parties will be funded
- Finding an alternative means of resolving likely regular conflict within the organization
- Having the owners realize the future of the business is in trouble and finding a strategy for change
- Realising that the entire business is being held back by one owner and finding a means to negotiate the exit of that owner
- Finding out the real need for change and assisting with specialist advice for merger or demerger
- Effecting share transfers to the preferred new owners
- Speaking to a financier about funding the early exit or increase in number of new owners in the business
- Identifying the divisions in the business that are at risk and involving the key person as a stakeholder in the business
- Identifying they are a takeover target or that they should in fact be aiming to take over the opposition
- Acting as a sounding board for an organization that is undergoing change
So here are a few suggestions as to how we as advisors can best solve a problem or two and yet comply with the legal obligations in getting a formal document signed.
Perhaps this is how the client can appreciate that the “true value” is not necessarily in getting a document prepared for a set fee, it is in the process and the care with which that is undertaken by all associated professionals.
This email is general in nature only and does not constitute or convey specific or professional advice. Legislation changes may occur quickly. Formal advice should be sought before acting in any of the areas discussed. Be aware that the information in these articles may become innaccurate with time. Responsibility is disclaimed for any inaccuracies, errors or omissions. Particular investments are neither invited nor recommended and hence this publication is not "financial product advice" as defined in Section 766B of the above legislation. All expressions of opinion by contributors are published on the basis that they are not to be regarded as expressing the official opinion of any other person or entity unless expressly stated. No responsibility for the accuracy of the opinions or information contained in the contributor's articles is accepted by any other person or entity. Copyright: This publication is copyright. If you wish to reproduce this article you require a license, which can be purchased here, to do so.