In 2024 we undertook an acquisition preparation project for a small manufacturing company in Hong Kong.

The key objective was to create and execute a plan for maximising the enterprise value of the company while minimising the business risks as preparation for a future due diligence and sale.

The project involved assessing existing processes and assets with a view to implementing improvements for a more efficient, robust and transparent business model.  This contributed to a deserved perception of a well-managed company with reliable future profitability. Establishing best practices and process improvements well ahead of their intended due diligence by prospective buyers supported a high EBITDA multiple and strengthened their hand in buyer negotiations for contractual concessions, contingencies, warranties and guarantees.

The work included the writing of the company’s first Business Continuity Plan, a document that detailed how they would recover from potential disasters, anything from loss of key staff to complete destruction of their factory by fire.

A full review of their IT systems revealed that while their locally hosted finance and order processing system was not ideal, with a few adjustments to backup procedures it was the most cost-effective solution for the time being. Other options such as an upgraded Cloud based solution were considered but rejected based on cost, however the plans for a future possible upgrade were documented.  Other aspects of their IT systems were restructured and improved, creating administrative and reporting improvements.  Being able to quickly access meaningful financial and sales volume data now supports decision making and also demonstrates a data-rich, metrics-driven business to potential buyers.

A formal business risk register was established together with a continuous improvement process to ensure regular risk management and mitigation. Various other registers were put in place to act as a kind of ‘safe’ for the business-critical assets. A physical asset register listed all the manufacturing tools, their value, insurance status and damage/loss recovery plan.  An IP register listed all product patents and their legal status.