Running a recruitment agency can have big ups and downs. When times are good there's great cash flow and its relatively easy to grow. Tough economic times like the current Coronavirus Crisis can bring an abrupt reality check however, and of course a quick business contraction! Whether it was the plan from the beginning, or due to recent challenges, most recruitment business owners eventually consider a potential sale.
So what are the first steps in understanding how to prepare your recruitment business for sale?, and is there anything unique to doing this in Japan, or Tokyo?
Owners of small to medium-sized recruitment firms need to first educate themselves on how they will be perceived by a potential acquirer of their business. Will investors be buying your brand and reputation? , licenses ?, client book & database?. Is it about leveraging your skills as the founder personally? or is it about your staff? What is the cost of replicating your business from scratch? What if you, as the founder, leaves, isn't that the point of selling? Lots and lots of questions, its great that your company is profitable, but that is not enough. All recruitment firms have a value, and there is probably a buyer for all recruitment companies that are seeking a sale. That said, getting buyers interested in "your" business (instead of someone else's), requires strategic planning and an understanding of what creates "sustainable value".
...getting buyers interested in "your" business requires strategic planning, and an understanding of what creates "sustainable value".
Some attractive characteristics of a recruitment agency include:
Predictable Revenue & Profits (3-5 Year Track record)
Less Reliance on founders (Multiple "Billers")
Specialized Industry Focus
Strong Management Team
Low Staff Turnover
Strong Corporate Governance and Compliance to International Standards
Clearly Presented Financial Data (Audited)
Access to Capital, Loans, Banking Relationships
Questions we commonly get from our clients interested in selling:
Who are the buyers?
What are they looking for in an ideal target company?
What valuation can I expect? What are the tax implications?
What are "deal breakers" from the buyers perspective that i should be aware of ?
How long will the buyer expect me to stay on with the business?
What's the difference between minority and majority share ownership?
....and many more.
... is there anything unique to the Tokyo recruitment market that buyers and sellers should be aware of?
Finally, is there anything unique to the Tokyo recruitment market that buyers and sellers should be aware of?
New Frame KK can help you understand the sale process, answer key questions, and walk you through the steps you'll need to prepare your recruitment agency for sale. We are also active in the recruitment M&A market, representing both buyers and sellers in Tokyo. Feel free to contact us on Linkedin, or through our homepage.info@newframe.jp www.newframe.jp