GS Verde Group | Experts on mergers, acquisitions & investments

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Trade Sale

What is a trade sale?

A trade sale of a business is a popular means of exit, often to a trade buyer operating in the same industry. The disposal typically entails a company's shares or assets either in whole or in part.

The acquisitive party may be a strategic buyer looking to grow their own business through market share acceleration, to expand regional footprint, or the addition of new services or products

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Trade Sale vs Other Business Exit Options

What does a Trade Sale involve?

Buyer comes from an external party
Purchasing company continues the trade of the acquired company
Can involve shareholding or assets
Works for insolvent companies as an exit route from administration
Can establish a clean break for an exiting owner

Features of an Employee Ownership & other sale types

Existing staff can take on ownership/directorial roles (EO/MBO)
Provides continuity for the business
Equity can be released in phases
Establishes a route for succession

Key Benefits

There are a number of benefits to undertaking a Trade Sale, including:

'Clean break' from the business
Earn full value of business
Acquirer has sector-based knowledge
Competitive bidding process can drive sale price
Improve market position

What happens when you sell a business?

Case Study

Who: Herida Medical, a healthcare manufacturer of pressure care mattresses, acquired by leading European medical device company Winncare.

GS Verde Services: Corporate legal advice

Quote: "The acquisition by Winncare marks the start of an exciting new era for our business. Over the last few years, we have spent time appointing the right people and the right teams in order to grow and with the strength of Winncare behind us, there is the opportunity to escalate this further. I predict a very bright future for us in the pressure area care sector." - Sean Spencer, Herida Managing Director

Trade Sale Advantages and Considerations

Trade Sale Advantages

An exiting owner can create a 'clean break' if they are looking to retire or are embarking on a new venture.

The vendors often achieve the full value of the business on day one.

The acquirer is likely to be familiar with the business sector, which can make the sale process more efficient - They are likely to understand characteristic demands.

It can allow for an opportunity to stay within the business.

Joining two businesses in the same sector can increase collective market share, remove competition, and open up new markets.

Trade Sale Considerations

Marketing the business for sale and seeking optimal buyers can be costly and requires expertise.

If the transaction does not go ahead, it risks business information being more easily accessible to competitors.

As a reaction to the change in control, there is the possibility of negative sentiments from customers and employees, which will need to be managed

Why GS Verde?

Selling your business involves several key stages, each of which requires expert and specialist advice. The GS Verde Group combines legal, finance, tax and communications services, working as one to form a complete business sale advisory team working to achieve the result you are looking for.

As deal-making experts offering all the necessary expertise under one roof, we help you navigate the journey from pre-sale preparation through to successful completion.