FAQ

Every sales process is company-specific and therefore unique - there is no universal recipe. Basically, the sales process can be divided into a planning phase and an execution phase.

The planning phase is time-consuming and aims to optimally prepare the business for sale. Thorough and detailed planning increases the likelihood of a positive response from potential buyers. The execution phase usually consists of a contacting phase, due diligence as well as the negotiation and closing phase. This brochure goes into more detail on various issues and topics of the individual phases of the sales process.

 
 

Many search channels exist to locate potential buyers. Database searches or analyses of industry segments and competitors are just two examples of common searches. The M&A advisor has the resources and tools to identify potential buyers. Central to identifying and approaching potential buyers is that the advisor has a strong national and international network with access to potential buyers.

Common valuation methods are the comparative value method (also called the multiples method) and the discounted cash flow (DCF) method. Basically, all common forward-looking methods of valuation are based on the following two value drivers:

  1. expected cash flow in the coming years;
  2. risk and growth prospects. An important distinction must be made between enterprise value and equity value. The value of equity results from the enterprise value less financial debt. The value of a company is independent of the underlying form of financing.

In principle, the following three advisory groups should be part of any sales process:

  1. The M&A advisor organises the sale process, helps prepare the business for sale, prepares objective value considerations, finds and contacts buyers, assists with due diligence and negotiates the terms of sale.
  2. The lawyer takes care of the legal aspects that arise in the context of a transaction. Once the parties have agreed on the parameters of the transaction, the lawyer intervenes more intensively in the process. His primary responsibility is to negotiate and document legal matters such as the purchase agreement or a potential non-competition clause.
  3. The tax advisor should be consulted as a supporting force in the preparation of the sale, the deal structuring and in questions related to the closing of the transaction. Depending on the situation, other advisors may be helpful: Accountants, real estate valuers, industry experts or management consultants.

It is important to clearly define the roles, responsibilities and incentives of the external advisors and to anchor them in a mandate agreement. Depending on the initial situation, management or key employees should also be informed about the sales intentions at an early stage. It is important to consider exactly who should be involved and how the person can behave towards the uninitiated. Incentivising the people involved is also crucial, because not every person will perceive the sale of the company as a personal advantage.

A company sale usually takes between six and twelve months. From the beginning of the preparation of the documents to the due diligence (company audit) to the negotiation of the contract.

It is advisable to look for a suitable time period rather than an exact time of sale. A suitable selling period is often given by the following three points:

  1. The company is an attractive acquisition target
  2. The company is ready for sale
  3. The company owner is ready for a sale

 

A seller must be aware that potential buyers regularly receive interesting offers. In order to stand out from the crowd as an attractive acquisition target, the first impression is therefore particularly important. As a general rule, a profitable company in the growth phase is easier to sell than a future turnaround. In addition, the increased number of unsolicited offers to buy can be an indication that there is interest in the market and that a good time to sell has come. This should be taken into account in the decision-making process.

Ideally, preparations for the sale should begin 2 to 3 years before the company is offered on the M&A market. This time is needed so that the changes launched can have their effect accordingly. Even if no immediate sale is planned, the planning and preparation for it should be carried out carefully, as personal circumstances can change quickly or an unsolicited, attractive offer can arrive.

Underestimating the time needed to prepare for the sale;

  1. Focus on investment in capital assets instead of debt repayments;
  2. Underestimating the relevance of a tidy balance sheet;
  3. no separation of operational and non-operational assets in the accounts;
  4. Posting private expenses in business accounts;poor communication and lack of incentivisation of key staff;
  5. Failure to actively plan for tax and real estate;
  6. Failure to recognise the existence of MBO efforts.