Management
Issue No. 37 - October/November 2007
Always be ready to sell, says IT guru
Every innovative business should always be prepared for sale, IT entrepreneur Dr Chris Beare told a recent Playford Capital seminar.
Chris grew up in Leigh Creek and Port Augusta and has made his fortune as a merchant banker and through Radiata, an Australian wireless chipset developer that was bought by US-based Cisco Systems in 2000 for US$295M..
He’s now a venture capitalist and chairs Adelaide’s burgeoning m.Net communications project.
Chris says positioning an enterprise for sale is something founders “don’t do enough homework on”.
“A common mistake is to try to sell when you’re ready, not when the market is,” he says, observing that it’s the CEO’s job to keep shareholders organised.
“It’s amazing the number of sales that fail because the shareholders disagree. While the shareholders are fighting among themselves the buyer goes away.
“A CEO should think about share value every day.”
Sales can take two forms: the strategic sale where a buyer likes the ‘fit’ with existing business; and the financial sale, where the buyer can see three to four years of strong EBIT that promises a quick return on investment.
Comparables are very important research aims – what similar companies have sold for and how much.
Not all assets and drivers of the business are relevant to the sale – in fact some may compromise it because they don’t ‘fit’.
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