Why do exits fail?

One year ago now we did extensive research for one of our clients, an international M&A player in the hospital sector. The objective of our work was to assist our client in purchasing several large Indonesian hospitals. After evaluating 100 possible deals our client decided to put things on hold. As our client later stated: “No deal is better than a bad deal”. 

One of the important challenges we identified in our extensive research is that land value tends to be an obstacle for foreign investors. 

Another issue we identified was that many of the hospital sellers lacked the necessary competence in preparing key data and reports. This often led to uncertainty around financial results and valuations.

The full report, which goes into details about the findings from our research study is available here.

Some of the issues we experienced during shis project in the healthcare sector were unique, but the majority of issues we encountered were very familiar to us, and very common across the full range of industries in Indonesia. 

Self-made men don’t cut their own hair

We can only imagine how many thousands of company owners in Indonesia lose out on invested funds, or are not able to exit their business because of lack of preparation for a sale, or less than professional handling of the important documentation that goes into the M&A process. 

Presenting a business that is well prepared for an acquisition, with all the necessary documentation professionally prepared is elementary marketing. It is the equivalent of presenting a product with nice and flashy packaging. More often than not this will greatly increase the chances of actually closing a sale of the business. On the other hand, preparing for an acquisition without external assistance can be likened to cutting your own hair before a first date…

In many cases presenting a professional and tidy business will also reduce the perceived risk of uncertainty associated with the company takeover. Documentation prepared ahead of the deal by the seller is also their best chance of showing the business from its most attractive side, and can be a great way of achieving a higher valuation for the business. 

Naturally most people don’t deal with purchases and sales of companies on a regular business. We do, so we know how much there is to be aware of both on the buyer’s and the seller’s side. Our best advice to those planning an exit: get prepared, and do it with assistance from professionals.

If you would like our professional help to secure a successful and profitable exit the answer is here. 

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