Role of New Ned ?26 Nov 2019 23:01
NEDs can provide a range of insights to help facilitate business sales, from giving an objective view on the capabilities of the management team and helping to increase the range of potential buyers through their networks, to bringing experience of selling a business and adding credibility to a company’s board based on their previous experience and past successes. In short, the role played by NEDs in the sale of a business can be vital.
Below are outlined the key areas where NEDs can add most value in the sales process.
Assessing the management team:
People are one of the best assets of any successful company and a key factor in attracting buyers. An NED can provide an objective assessment of the management team to ensure that the right people are in place to drive the company forward and convince buyers that the business will meet its strategic goals and the valuation they have placed on it. If any weaknesses are identified, then an NED is well placed to be part of the search process for fresh senior executive talent.
NEDs are also important in succession planning. If an entrepreneur is to leave the business at sale then typically 12 moths beforehand the process of looking for his successor will begin and an NED can often lead or provide significant input into this process. If an entrepreneur is to stay on for a period in a more non-executive capacity, which is not an easy adjustment for most to make, often the help of supportive NED can ease this transition.
Identifying a broad range of buyers:
Having a broad range of potential buyers is critical to a successful sale. Therefore NEDs with a broad contact base spanning various sectors, who can identify buyers from alternative markets or even overseas, or who also have specialist sector knowledge, allowing them to give a detailed profile of the type of buyer, are key.
With Chinese or Japanese buyers, where the sales process can often be much longer, NEDs are often able to begin initial, informal conversation early, to smooth the way before any full formal talks and negotiations might begin