Shield M&A's Hot Tip
"Does your business have a sell by date?"

This month:
- Shield's Flexible Lamp deal
- Does your business have a sell by date?
- Download Shield Exit Planning Discussion Guide

NEWS: Shield sells Carlyle's Flexible Lamps to US giant Penske for $40m

MAJOR US automotive group United Components Inc. (UCI) (in the Carlyle portfolio) today announced the $40m sale of its UK subsidiary, Flexible Lamps to Truck-Lite Inc., a subsidiary of Penske Group, the major US automotive sales, leasing and racing group, founded by legendary American road-racer, Roger Penske, owner of Penske Racing.

London-based international divestiture specialists Shield Corporate Finance served as M&A advisor to UCI on the transaction. The deal was noteworthy not only for creating a global leader in lorry lighting, but also for securing the future of a UK business and its final salary pension fund. In a landmark transaction for the UK Pension Regulator, clearance was given to a strong strategic buyer without requiring a special contribution to the pension fund.

Keith Zar, General Counsel of UCI, said "This deal will enable UCI to focus on its core North American aftermarket businesses. Shield did an outstanding job in representing us in the UK, running a global auction and securing a bright future for an excellent business".

David Young, MD at Shield Corporate Finance, said "This is a brilliant outcome for all involved: Carlyle's UCI can now focus on its core US operations, safe in the knowledge that the jewel of Flexible Lamps will continue to sparkle in its new global setting at Truck-Lite". Read more

Does your business have a sell by date? asks Shield MD, David Young

I get a shock sometimes when I go to use the kitchen pedal bin: stranded atop a pile of kitchen waste lies a 4-litre milk container, full and unopened. "Eee-euch!" screeches my teenage daughter as I salvage it, wash it off and check its contents, "It was past its sell by date. Don't touch it...it has bits in it!".

"That's cream", I point out, sorry that we nearly lost the whole thing - and failed to recognise the best of it.

Perhaps it's a sign of the times that, these days, more and more shareholders set "sell by" dates on their businesses. Private equity groups have increasingly short hold-periods, as they compete to keep their IRR's (internal rates of return) as high as possible. And Shield sees increasing numbers of entrepreneurs who have started up a business with a specific exit date in mind.

Not necessarily a bad thing, this, but it does risk selling the shareholders short.

The business may not have had time to

demonstrate its quality of earnings
or its potential
and it might not have been well prepared to withstand the scrutiny of potential buyers.

This is where it's more important than ever for sellers to have a good M&A advisor on their side, able to advocate value which is not obvious and cook up the sizzle which cannot yet be smelt.

But businesses, like milk, certainly can curdle; their value can go off. But not because of some arbitrary shelf life. Rather it's to do with competitive dynamics and a poor outlook. A business starts to stink if

its sales stagnate
its profits plummet
or its accounts are error-infested.

In fact we've identified the top ten turn-offs for business shoppers - to download the list, click here.

On the other hand, the most appetising businesses are those that have grown healthily (not necessarily organically!), with tempting prospects. Buyers salivate over growth potential, synergy potential and strategic benefits. But buyers still need help to see all that.

Most business plans aren't written with sale in mind and don't provide the best picture of the possibilities a business offers to various buyers. That takes special work, best undertaken by specialists, like Shield.

So does your business have a sell by date? We see three sets of timing issue which call for consideration:

the needs of the shareholders;
the lifecycle of the business
and the lifecycle of its industry.

These considerations often point in different directions, requiring careful judgement as to what is best in your particular circumstances.

If you want to have a discussion with your shareholders, or Shield M&A, about the sell by date of your business, here's a one page discussion guide that we hope will help: download Shield's Exit Planning discussion guide

Essential book on Value-Building now available to buy here

'Increase and Extract the Value of Your Business', co-written by Shield M&A's David Young, is an essential book for business owners and leaders, showing how to build value and make a business more saleable, what a sale involves and even how to realise value without losing control.

If you are interested in any of the following questions then this book is for you:

Can I realise value without selling/losing control?
How can I make my business more saleable?
How can I maximise value in my business?
What choices and alternatives are there?
What would a sale involve?
What is value?

Get your copy here

About Shield M&A

Selling a business? Contact David Young, Founder & CEO, of Shield on 020 7031 8265

In 2001, David Young founded Shield Corporate Finance as an independent specialist advisory firm, to provide world-class M&A advice without regard to transaction size and without conflicts of interest. With a special interest in the keys to success in divestiture work, Shield M&A is committed to producing remarkable results for shareholders.