Selling your leasing company
If you are thinking about selling your leasing company and want to get the best value, read on…
1. Know your facts
How many leases have you written, how many customers do you have, what is the average profit per deal, how many suppliers do you work with, where are the customers located, what is the average age and size of their business, what is the default rate?
Summarise this information clearly in your Information Memorandum. The higher quality the information, the more your business will be worth. Also, do not forget to make it easy for them to read – graphs help.
2. Operations Manual, Employee Manual, Sales Manual
If you are selling your leasing company with staff, make sure all the personnel records are up to date. Buyers are interested not just in who works at the company, but also who has worked there in the past.
Write an Operations and Sales Manual. It will make you look like a more structured company. Buyers always fear the unknown, de-risk their position by documenting the business and any issues.
3. Who will buy your leasing business?
Think about who would buy your company and why. Will it be another broker and could you sell to a funder? Will it be to a supplier, insurance company or private investor? Wyse Leasing was mainly known as an IT leasing company. At the time of sale, there were only a few other IT leasing companies that would have bought us. However, we positioned ourselves correctly for the company that eventually bought the Southern operation of Wyse Leasing.
4. Prepare for some hard work!
Selling your leasing company will be hard work. You will have to supply all sorts of information and find documents – like share certificates – potentially lost years ago. Prepare for selling now, even if you might be looking to sell five years down the line.
5. What is the buyer buying?
When you sell an asset finance company, think about the buyer and what their upside is. It might be that you have some great staff, you are located in another part of the country or they can consolidate offices and save money. They could be after your lease origination or customer base. One funder said to me he was after a lease company with a large own book position, as his cost of funds would decrease significantly if his portfolio size hit a certain milestone.
6. What are you going to do now?
If you are not staying with the company, what about restrictive covenants? If you do stay on, can you work for someone else? If you want to retire, then will you have enough money to support your lifestyle?
If you are looking to either buy or sell a leasing company and would like a chat, please call me directly for a confidential conversation.
Jeremy Hall. 01494 611 456.
