Easing the process

Selling a family business impacts upon the emotions and future of all involved. Ray and Chris Clarke found themselves in a quandary when an approach was made for their family firm, Datacare, Since it was established in 1980, Bicester-based Datacare, which provides high security security, off-site data and document storage and management services to medical, financial and utilities comanies, had grown to become a market leader.

It had drawn in many family members, including their son Jon, who took over as managing director in 2005.

Then, out-of-the-blue, the family received an offer to buy the firm from Supporta, a public company specialising in payroll and back office services.

Mr Clarke said: "We had been investing in expansion rather than grooming the company for sale.

"Despite feeling unprepared, Supporta's offer caught our attention but, having seen the horror stories of others, we felt we lacked the expertise to work on this alone."

The couple had personally carried out every role within Datacare over 25 years. Selling would affect other family members, particularly Jon.

Mr Clarke added: "We were comfortable with Jon leading Datacare as a single company, or as part of a larger group.

"Jon made the final decision to sell, as becoming part of a group benefits investment, growth and staff development."

The Clarkes wanted to ensure Jon's technical and commercial expertise would play a major role in the future of Datacare.

Fortunately, Supporta was keen to retain him.

Mr Clarke said: "You have one chance to sell your business, so it is important to get it right.

"If I had known we were going to sell, I would have groomed the company for 18 months before putting it on the market.

"Assembling a crack team of experts was the best thing we did - I would not change a thing."

It is important to be confident that the deal is realistic and your team contains proven skills and experience to avoid financial loss.

The Clarkes chose Oxford finance firm Mazars to conduct the sale, while Blake Lapthorn Linnell, based in the same offices at Seacourt Tower, Botley, provided legal services, meaning communication was speeded up.

Mr Clarke said: "Negotiation skills were vital and directly impacted upon the quality of our retirement and our son's career."

There were a few areas where inherent, informal, software and tenancy agreements posed potential risks to negotiations.

Mark Standish, lead advisory partner at Mazars, said: "Normally, we would formalise such agreements before going to market.

"Ray was open and honest about the detail and allowed our team to communicate freely with those concerned. This enabled us to be upfront with Supporta and resolve queries extremely quickly."

On average, customers would audit Datacare twice a month. This meant information access was second to none when it came to due diligence.

Mr Clarke said: "Our team advised on the type of information to provide and prepared it for presentation, taking an enormous workload off our shoulders.

"Even with my wife's super-efficient filing system, we could not have managed on our own.

"Due diligence is all-consuming and the distraction can threaten revenue streams.

"You need somebody else to run the business while you concentrate on providing the buyer with important information."

Christine Lau, manager of corporate finance for Mazars, said: "Undergoing a mini due diligence before going to market helps refine records in preparation for the full, external process without discouraging the buyer.

It also helps the client understand how much work will be involved."

Selling Datacare affected the entire Clarke family but, most importantly, they were able to support each other over the six months of negotiation.

Following completion in June this year, Ray rewarded his family with a well-earned holiday, and he and Chris can look forward to an enjoyable retirement.