|Brian Spence, managing partner of S&P Investments|
Brian Spence *
I’ve now lived in beautiful Việt Nam for several years and have recently been reflecting on how my work compares here to the many decades when I was a financial and business advisor in the west.
One area where it is particularly instructive to observe people’s behaviour is when they are looking to sell all or part of their business. Who they prefer to sell to, when and how, tells you a lot about them as an entrepreneur, and as a person.
A phenomenon I’ve noticed is a real reticence about being transparent with potential buyers and their advisors. More than once I’ve seen deals soured because sellers are reluctant to open up their books.
Here I detect fears about giving away information to competitors and the discomfort many would feel about others in their community seeing the granularity of their financial affairs.
The curious do jostle with the serious buyers, and an advisor’s first duty is to act as a gate-keeper filtering them out. You need only get down to the details when a deal is well progressed, which should give sellers comfort.
But there is a broader, more interesting trend. Organisations happy to submit to proper due diligence are capitalising on how this increases interest from international investors.
These are being favoured noticeably more, in part due to perceptions of greater professionalism and increased trust in deals guided by expert hands.
Rightly, serious investors invest properly in due diligence and deal-making. Foreign and significant domestic firms invariably bring in consultants. Some find this offputting. The cannier recognise that this can be very good for sellers.
Firstly, any reputable business advisory or accountancy firm will operate under binding confidentiality and strict professional ethics codes, allaying any concerns on that front.
Second, M&A specialists are more used to deploying leading methods for measuring the true value of businesses and may be amenable to a more favourable price on the basis of forward revenues – particularly when there is also surety that the financials are as presented.
To ensure a business fetches as much as it ought to, openness closes the deal.
Only trusting close friends and family in business may be a time-honoured tradition, but moving away from this is simply part of the maturation of the market. Broadening horizons and aligning the way you present your business with what investors want can lead to far better deals.
New levels of due diligence take a little getting used to but aren’t resented by those who recognise that they – and Việt Nam – are competing on an international stage.
Transparency is rightly the direction of travel in all things, and a key sign of a nation’s confidence and good faith.
I look forward to observing the Government’s continued efforts to create an attractive environment for wealth creation and a level playing field for all – and how businesses up their games in response.
* Brian Spence is managing partner of S&P Investments. He has over 35 years of experience in the UK financial services industry as an investment manager, financial planner and M&A specialist. He is a regular contributor to the UK financial press and has a deep understanding of the financial services community. Brian’s column will reflect on all the challenges and opportunities within the Vietnamese market, bringing a fresh perspective to today’s hottest issues. The columnist’s email address is firstname.lastname@example.org.