Are you a business owner or partner?
If you are an owner or shareholder of a major private company with a turnover of R100-R900 million you have probably spent many of your best years building your business. You are no doubt planning to realize full value for your business by transitioning from an entrepreneur led company to a professionally managed organization, highly prized and valued by international companies and funds as well as suppliers of capital for growth. You are aware of the need for a confidential consultant who specializes in adding value to your business in the same way you have specialized in building it over the years. Someone who will help you achieve your highest ambitions.
If this profile suits you, then we invite you to read further, starting with Who Are We?
Who are we?
The Nelson Consulting organization took shape in June 2010 following an article written by the McKinsey Global Institute titled, “Lions on the Move in Africa’. I had just sold a business I founded to a JSE listed group and completed the task of building a large FMCG food and beverage portfolio for the Weigh-Less organization.
Excited by the McKinsey article and aware that I was well connected in the food and beverage industry, a number of international companies and funds approached me to find suitable businesses for them to purchase. The brief at that stage was for target companies with a market in the LSM 4-7 range, possessing a famous food or beverage brand with a footprint in Africa that could be further developed. There were over a dozen requests for such target companies and I managed to satisfy most of them. After the due diligence began it became clear that not a single one of these target acquisitions would culminate in a sale. There were simply a host of factors which did not sit well with international companies.
With a growing number of buyers on the one hand and sellers on the other, there was clearly a gap in the market for a consulting organization that could bring the sellers up to scratch and thereby release the pent-up value in their businesses.
A business is valued at what willing buyers will pay and this is irrespective of whether the business is for sale or not.
The improvement of the value and sale-ability of a business is simply good business. Nelson Consulting was founded to work in this space. A space best expressed by one of our international clients when he said, “Major international companies such as ours don’t fix businesses, we pay top dollar for top businesses.”
So who then are we? We are people who hate to see you, the entrepreneur, give away the product of your life’s work and passion for a fraction of what it is worth and can help you to realize your highest ambitions in this area. Telling anyone that you are selling your business without talking to us first could be a mistake that you will have a long time to regret.
We have a team of highly experienced specialists working on a project by project basis. We have watching briefs from major companies looking to purchase fine businesses and can often find the ideal match, always in absolute confidence.
Although that is our focus we have a number of clients who have highly developed management systems and come to us because of our strong connections and reputation for putting together tailored deals. We have also dealt with companies who are not in the market to sell in the short term but use us because of our breadth of food and beverage experience and what it brings to innovation and strategy with the resultant handsome increases in operating profits.
What do we do?
In a nutshell, we add value to your business by innovation and strategy.
A good article on this subject was written by Michael J Mauboussin and Dan Callahan, CFA, of Credit Suisse on 22 July 2013 and called ‘Measuring the Moat, Assessing the Magnitude and Stability of Value Creation’. The 70 pages are understandably heavy reading. On page 49 of this article they bring it all together as follows: ‘By identifying a sample of truly superior companies, the authors were able to study the behaviours that appeared to be behind their performance advantages. They couldn’t find any commonalities when they looked at specific actions but made a breakthrough when they examined the general manner in which these companies thought. The manner was highly consistent and fit with a generic differentiation strategy. Raynor and Ahmed argue that, when considering business decisions, the skillful companies acted as if they followed 2 essential rules:
Better before cheaper : compete on differentiators other than price.
Revenue before cost : prioritize increasing revenue over reducing costs.
That is exactly what we do. We help you to develop new products, improve your branding and demand and by focusing on your value proposition, where you play and how you win, we can bring you to a focused leading position in the market. This market position together with internal support structures, leads to higher returns for you. It also ensures that when the day comes to sell your business or to take in partners or investors, your company is valued at its optimal value.
We are able to do this, not because we have a host of professional qualifications, which we do, such as Professional Membership of the South African Association of Food Science and Technology, (SAAFoST), Fidelity Certificates from the EAAB, prestigious awards for international marketing and so forth,but because we have a deep understanding of strategy and innovation.
I was fortunate to meet Prof. Alexander Osterwalder, author of the best selling book “Business Model Generation,” now prescribed in business schools around the world including our own, and translated into 18 languages, and was privileged to be invited to join his innovation hub. While he did all the writing and I was one of many on the periphery, I did receive the book page by page and participate in its creation. Prof. Osterwalder is famous for his business model canvas which we use and particularly the value proposition segment.
I was also one of the acknowledged on-line contributors to John Sutherland’s book, “Disruptive Leaders, Profiting from signs from the future.” Nelson Consulting use these cutting edge strategy tools and techniques together with “The Blue Ocean Canvas’ and other business tools of Mauborgne and Kim with a good dose of food and beverage industry experience, some hard work and a sprinkling of good luck. This constantly results in outcomes that surprise even me, an eternal optimist.
SELLING? When the time comes to sell your business we need to work together carefully and be very, very quiet about it. Tell no one.
WE SELL THEN WE TELL
If you do it the other way around and let anyone know that your business is for sale you’ll probably destroy a large part of its value. Trust nobody. The prospective buyer will be bound over by a strong non disclosure agreement. Failure to do this often drives off your best staff, drives up your raw material prices, upsets the trade and opens you up to predators.
We will bring you the most suitable buyer or investor. When the deal is done there will be no uncertainty and the buyer and seller will visit the key publics together to announce the happy event. These are; your major customers,suppliers,financiers,staff and the press.
What can we do for you?
WHY YOU SHOULD COME TO US TO SELL YOUR BUSINESS?
As counterintuitive as it may seem we have mainly sold businesses that were not in the market to sell. This is largely because we have close associations with and understand our major buyers and we have a watching brief for the right companies. A great company can command a great price. Sometimes, in the case of funds, we structure unique deals where the buyer puts in the money and finances the expansion of the business and the owner runs the business for some years and enjoys an additional risk free return in the form of an earn out. Most multi-nationals look for an outright purchase. The seller’s objectives play a big part in the matching process.
We know what our buyers pay money for and what they do not. There are many subtleties, which if ignored will eat away millions from your selling price. Here are just a few examples; International companies typically have policies and conventions that compel them to pay a minimum wage typically far in excess of that which local companies may be paying. If you have 500 staff members and you are paying them R2000 short of the international company minimum figure then that is R1 million off your price.
If you sell on the wrong day when your overdraft is R10 million higher than at the end of the month then that is R10 million off of your price.
Know that every R20 000 per month you gain or lose is worth at least R1 million in your pocket when you sell. Yes that is every twenty thousand rands.
If you can establish a credible growth trajectory then we can sell your business on the future growth and profitability projections, often without warranties. If you have a fifty year old business the last two years can be a more important factor in determining the selling price than your previous 48 years of sweat.
A clear business model is most important as is focus on a specific industry. Multi-national companies are looking for focused businesses with high market shares. Here we can provide valuable assistance.
Call me now on 083 6754040 and I will check with one or two satisfied customers in your industry and mail their details to you so that you can talk to them and get a feel for the positives and also the challenges associated with such a life changing exit journey to the achievement of your highest ambitions .
improving the value of
your food & beverage
business by innovation
We have added value to the following brands:
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