This first stage is essential in order to create a full report of the strengths and weaknesses of the business. It is from an external point of view, notably that of the eventual buyer. It is the starting point, which underlines the critical points to improve and the strong points to promote for the sale. The diagnosis will also highlight the necessity to carefully prepare the business several months or even years before the sale.
1. Strategic Diagnosis
Inevitable buyer’s questions: what type of market will this business grow into (growth rate, competitiveness...)? What is its strategy to exploit this market (differentiation or cost leadership...)? What will I be able to do (develop or optimise it, what is its potential...)? The strategic diagnosis anticipates these fundamental questions from buyers. It helps the seller to position, or even reposition their business to match buyers’ profiles, which have been previously defined with our help.
2. Financial and Economic Diagnosis
Once the strategic diagnosis has been established, it is necessary on one hand to demonstrate the viability and the economic attractiveness of the business and on the other, to analyse its financial ability to respond to development needs and to assure its durability. The economic and financial diagnosis will equally allow us to determine the budget for the buyout and for financing a development plan.
3. Operational Diagnosis
When the business has a strategy and adequate financial means, it rests with the future buyer to assure that it has high performing operational capacity. They will do a critical analysis of different operational aspects according to the type of target business. For example, the critical point will be the expertise of the team for a tertiary business; the factory for an industrial business; logistics for a distribution company, etc... In addition, small businesses have recurrent weaknesses such as the director's intuitu personae. It could take a year or more to put a second in command or supervisors in place.
4. Juridicial and Legal Diagnosis
This consists of verifying that legally nothing poses an obstacle to the future sale from an internal (shareholder agreement, a consent clause...) or external (an intuitu personae license contract) point of view. It is equally necessary to identify potential or known legal action against the company as well as environmental and social risks.
1. Strategic Diagnosis
