A fundamental shift towards the use of renewable energy has enabled solar energy companies to take a strong stance in this market. Furthermore, subsidy-free solar ‘farms’ that use advanced energy storage technology are now opening.
Prior to selling your solar energy company, you need to carefully prepare the business so that it stands the best possible chance of achieving the value you are seeking. So what can you do to prepare your company for sale, and how should you approach the inevitable challenges you will face, both in terms of your sector and also the selling process itself?
Although the government has announced its intention to install solar panels on 800,000 social housing properties, the Feed-In Tariff scheme is ending in 2019 and is unlikely to be renewed until 2025.
This has enabled householders to take advantage of renewable energy sources such as solar power, but without the scheme it is unlikely to be cost-effective for them to purchase their own solar panels. The difficulty in predicting the price of solar energy with any accuracy is one of the reasons that the scheme is ending.
Technology has more or less reached the ceiling for now in terms of efficiency – currently at around 25% efficiency for mass production panels. Anything higher than around 30% is very unlikely in the future, without some form of major technological development. Too much DC current injection into a grid integrated system also raises issues with frequency, and consequently the stability of supply.
According to a government publication, the UK has secured “24% of the total available funds” in relation to the European Investment Bank’s Climate Awareness Bonds for renewable energy and energy efficiency.¹ But infrastructure investment and project funding may be cut once we leave the EU.
There are a number of ways your business may be valued, one of which is EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation). This figure is then multiplied by an agreed number in order to arrive at a valuation.
It is advisable to draw up a confidentiality agreement to prevent your business information falling into the hands of competitors, and to keep the sale a private process for a while. Interested parties should sign a non-disclosure agreement (NDA) before you release the information memorandum mentioned earlier.
Once you have narrowed down a shortlist of buyers to a single likely purchaser, they will need to undergo a process of due diligence to ensure the information you have provided is reliable and accurate.
The heads of term agreement sets out the results of detailed negotiations between the advisers working on your behalf, and your potential buyer.
Selling My Business are experts in this sector, and can help you sell your solar energy or manufacturing company. We will ensure the sale is handled professionally to ensure you receive the highest possible value. Please contact one of the team to arrange a free consultation.
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