Company acquisition: everything you need to know in 2025
Buying a business is a big decision. There are many different factors that need to be considered before deciding to buy. What does the process look like? What time frame should be planned for? Where do financing pitfalls lurk? We explain everything you need to know about buying a business!
Why buying a company is easier, more lucrative and more exciting than founding it yourself
We support prospective buyers looking for the right company with our large KERN network from targeted, efficient research to successful takeover (M&A). We are connected to the most important stock exchanges and maintain over 500 direct contacts with banks in the D-A-CH region. This is how we enable inorganic growth as well as the implementation of your entrepreneurial vision.
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How to make your business purchase a success. The expert guide for family businesses.
Concentrated expertise and compact information. 25 KERN experts have summarised the most important information for your successful company acquisition (M&A) on 200 pages.
Company acquisition checklist (PDF)
The Corporate transaction can be an overwhelming endeavour at first glance. But it doesn’t have to be if you get professional support.
For the due diligence (dd = due diligence) you can use our free checklist here, which gives you an initial overview of the documents to be checked.
Company acquisition (M&A) with the support of our KERN network
Precise search profile
Creation of a customised profile for the targeted search for suitable companies.
Targeted buyer approach
Addressing relevant companies and multipliers such as chambers, banks and consultants. Advertising in the most renowned M&A exchanges.
Selection
Identification, analysis and selection of suitable target companies. Discreet direct approach and verification of readiness to sell.
Negotiation financing partner
Negotiation and integration of a wide range of financing partners for the acquisition of a company.
Due Diligence
LOI implementation as well as preparation and execution of the company audit (DD), negotiation and conclusion of the Company purchase agreements.
Post Merger Integration
Optional Post Merger Integration (PMI). Aftercare for corporate development, such as integration of teams, synchronisation of mission statements.
Are you thinking about buying a company?
Take the opportunity to benefit from our many years of experience in company succession. Whether you have initial questions or are already looking specifically for a suitable company - KERN will guide you competently through the entire process.
… we succeeded in finding exactly the right company for our particular niche
We had our growth strategy accompanied by the specialists from KERN. With a precise target analysis and detailed market research, we succeeded in finding exactly the right company for our particular niche. The effort involved in such a step should not be underestimated. With KERN, we have found professional support. At the same time, the succession problem of the company to be taken over could be solved substantially and in the long term.
An extremely reputable and competent partner in the accompaniment of succession processes.
We have had very good experience with Norbert Lang in particular. He is an extremely serious and competent contact person when accompanying succession processes. As a lecturer at lecture events, he impresses with his very lively and authentic style.
From start to finish, the cooperation with Ms Kalonda was reliable and professional
From start to finish, from the search for a suitable company to the successful
conclusion, the cooperation with Ms Kalonda was reliable and professional.
During the ups and downs of a company acquisition, the involvement of a KERN consultant as a
Sparring partner and solution-oriented pathfinder in the many negotiation situations very
helpful.
I felt very well looked after professionally and also personally excellent in every situation.
supervised.
A big thank you for the professional cooperation crowned with a degree.
Advantages and disadvantages of buying a company
The advantages include that you acquire an established company that already has customers and enjoys a certain degree of name recognition. You also take over a team of employees who already know the company and how it works.
However, there are also possible disadvantages to buying a business. Buying a business is a big decision that should be carefully considered. Above all, the risks of the purchase should be weighed up. Can I, as the buyer, ensure the important know-how transfer of the transferor? Will customer and supplier relationships remain intact and can I integrate the employees into a common culture and future?
Are you an entrepreneurial type?
Before you decide to buy a business, you should first ask yourself whether you are the right type of entrepreneur. After all, not everyone is suitable for acquiring an existing business. However, if you have the following characteristics, then the chances are good that you will be a successful business buyer:
- You are entrepreneurial in thinking and acting
- You have a vision and want to make it a reality
- You are creative and think out-of-the-box
- You are willing to work with commitment and take risks
- You enjoy dealing with people and appreciate clear communication
Position of interest
The objectives of buyers when acquiring a company vary:
Financial investors: Focus on high returns in 5?8 years, mostly with resale.
Strategic investors: Long-term development and integration of the company.
Company successor: Family businesses offer many opportunities to ‘live’ and culturally take over a company through the generational change.
It is important to find a company that fits your size, your business model and your corporate culture.
Forms of takeover
There are different forms of taking over a company. Basically, a subdivision into asset deal (sale of the individual components of a company) and share deal (sale of a framework under company law) makes sense.
Asset Deal
An asset deal is a transaction in which only the assets of the company are sold. This means that the buyer only acquires the assets of the company but does not assume liability for liabilities. This is a common approach to company acquisitions as it allows the buyer to minimise the risk involved in taking over a company. It may also be the seller’s deliberate goal because tax and legal considerations prefer to leave the company with the transferor.
Share Deal
A Sell limited liability company per share deal is a takeover in which the company is often bought as a whole. This means that the buyer acquires the full shares of the company and thus gains control over it. In the process, the company remains a legally independent organisation. However, the new owner not only receives the shares in the company, but thus also control over the company.
Shareholders can also only Sell GmbH shares. The influence of the new owner of the shares depends on the ownership structure and the amount of the shares.
Difference between asset deal and share deal
To put it in a nutshell: In an asset deal, only the assets of the company are sold, whereas in a share deal, the business shares are also transferred. This difference is important as it affects liability risks and possibly also customer and supplier relationships. To look at all the differences in detail, we recommend our article Share Deal vs. Asset Deal.
Types of company purchase
There are different types of Company acquisitionwhich relate to the method of purchase, pricing and terms of the purchase. Some of the most common types of company acquisitions are: Management Buy Out (MBO), Management Buy In (MBI) and Leveraged Buy Out.
Management Buy Out (MBO)
A Management Buy Out (MBO) is a method in which the existing management of a company takes control of the company. In an MBO, the management buys the company from the previous owners and becomes the new owner. This has the advantage that all actors often know each other for years, everyone is familiar with the structures and details of the company and the employees already know the successor well.
Management Buy In (MBI)
A management buy-in (MBI) is a type of company acquisition in which an individual (or several individuals, almost analogous to a start-up) buys shares in the company to be acquired. The solution of the Company succession An MBI is the classic succession solution and is very common in smaller companies. The contribution of external knowledge and expertise by the MBI and thus the subsequent entrepreneur can help to facilitate the transition to a new strategy and put the new company on the road to success.
The MBI Financing is more often difficult because, depending on the purchase price volume, sufficient own capital should be available for purchase price financing and banks become sceptical if the equity share is too low. Therefore, an MBI must be able to present a good business plan and raise the necessary funds in other ways.
Leveraged Buy Out (LBO)
A Leveraged buy-out is a type of company acquisition in which a buyer finances a very significant part of the purchase price with loans and the company itself also borrows additional funds. This enables the buyer to acquire a larger share of the company than would otherwise be possible.
LBOs can be attractive to buyers as they offer the opportunity to acquire a company without having to raise all the funds. They can also lead to a change in the company’s equity/debt ratio, making the company more vulnerable in critical market situations.
However, LBOs are associated with risks. For example, it can be difficult to obtain loans to carry out an LBO. In addition, the high debt burdens created by an LBO can lead to the company getting into trouble if the business does not perform as well as expected.
Company acquisition process - Our guide in 10 steps
If you decide to buy a business, there are some things you need to know in the M&A process should pay attention to. First, you need to understand the buying process. The following paragraphs explain the typical course of a company purchase. The first step in buying a company is to find a suitable target company. This can be a challenge, as there are a confusing number of different companies and not all of them are suitable for purchase. You can find your personal roadmap to buying a company in the Outline of the procedure take out.
Create search profile
Especially if you want to buy a company, it is important to create a search profile in renowned stock exchanges. By creating such a profile, you can at the same time get to know yourself better and find out what kind of company suits you best. In addition, with the help of a specific search profile, you can make the right contacts more quickly and thus accelerate the purchase of a company. Here, the wisdom ? If you want to be able to do everything, you can’t do anything.
This profile should include your preferences and criteria for the ideal business purchase. The criteria include:
- The type of business you want to buy
- The size of the company
- The location of the company
- The budget you are willing to pay for the purchase of the business or can raise the necessary equity capital.
Find company sale offers
Whether you want to buy your business yourself or hire an external M&A specialist ? finding the right offer is an essential part of the buying process. To ensure a successful purchase, you should prepare well and make sure you gather all the relevant questions before you start looking for the right offer. There are various places where you can look for offers for the sale of your business.
Company exchanges
Many entrepreneurs are looking for a suitable buyer for their company. One way to find potential buyers is through a company exchange. Here, companies that are for sale are brokered. DUB, Nexxt Change and KERN Company exchange are some of the largest, reputable and best-known stock exchanges. Many people see stock exchanges as an active and broad-based way to sell or buy a company.
Other opportunities outside of stock exchanges
This is the famous needle in a haystack and usually requires special knowledge and access to databases. After all, no entrepreneur hangs a ‘For Sale’ sign in front of his company door, just like with real estate.
We have worked out several options for company takeovers and the successful identification of companies. You can find these different options in our technical paper on the topic of Target Scouting.
Sales approach and selection
You should not select potential sellers based on price, but understand the business model and be able to develop it in perspective. This requires good communication between seller and buyer to ensure that both sides know and understand the expectations.
It already starts with the selection of suitable objects for purchase and the first contact with the respective seller. In this way, a good first appearance is also the first step towards a successful transaction.
NDA and Letter of Intent
The NDA and the Letter of Intent are two of the most important documents involved in the purchase of a company.
A non-disclosure agreement (NDA) is a legal document that prevents confidential information from being shared. This document is usually signed between two parties before they start negotiating or exchanging data.
A Letter of Intent (LOI) is a document that sets out the intentions of one or more persons in relation to an agreement or transaction. It is not a legally binding agreement, but rather serves to facilitate and expedite negotiations between the parties. The Letter of Intent can also be used to set out the essential terms of a future agreement.
Also indispensable: the Information Memorandum contains detailed information about the company, its business activities and its financial position. The aim of an information memorandum is to give potential investors a comprehensive overview of the company so that they can decide whether to invest in it.
Business valuation
The Business valuation is an essential part of the purchase process. The valuation of a company is usually carried out by an independent financial expert and is based on various factors such as the current and future earnings potential, the competitive environment, the market opportunities and the financial situation of the company. Due to these factors, the valuation of a company can vary greatly.
The following two paragraphs are infoboxes for the “Fairness Opinion”.
An important aspect when you consider the Calculate enterprise value is the so-called “fairness opinion”. This is an opinion from an independent third party confirming that the price is fair to the company.
In order to obtain a fairness opinion, the company must engage an expert. This expert will then conduct an investigation and issue his or her opinion. As a rule, the fairness opinion is part of the expert’s report.
Clarify financing
A solid financing strategy is crucial for a successful company acquisition. Clarify this in advance:
Which financing options suit you (equity, credit, vendor loan)?
How much capital do you need, including the growth phase?
Which lenders or funding programmes are eligible?
Financing options at a glance:
Credits: Banks and savings banks offer traditional financing options.
Investors: External donors may have a strategic or financial interest.
Vendor loan: Part of the purchase price is financed directly by the seller.
Earn-Out: Payment of a portion of the purchase price if the target is achieved at a later date.
Subsidies: KfW programmes or regional subsidies help with financing.
Consult with tax and financial experts at an early stage to develop the best financing strategy. Allow at least 8 weeks for this, and up to 3?4 months for more complex projects.
Due Diligence
The Due Diligence is an essential part of buying a business. It involves reviewing the company’s financial records and business processes to ensure that it is a good investment for the buyer and that the seller’s claims made so far actually correspond to reality.
The following paragraph is an info box for the “Due Diligence Checklist”.
Due diligence is usually carried out by a team of experts who have experience in different areas of the company. As a guide to the crucial elements of due diligence, we have prepared a comprehensive list for you. Use our Due Diligence Checklist gladly for your purchase.
Legal Due Diligence and Tax Due Diligence
Legal due diligence is a process in which a lawyer or other external party thoroughly reviews the documents of the company being bought to ensure that there are no outstanding legal disputes and that all contracts and licences are in order.
Tax due diligence is a process whereby a tax advisor or other external party reviews the records of the business being purchased to ensure that there are no tax risks.
Negotiations and purchase price agreement
After you have found the right buyer, it is time to start the negotiations. Negotiations are an important part of the business acquisition and can often be decisive in whether the purchase is successful or not. It is important that you prepare well for the negotiations and know what you want and what you are willing to give.
There are many different negotiating points in a business purchase, but the price is of course one of the most important. If you can agree on a price, the rest of the negotiations are usually just a formality.
M&A Transaction / Closing
Buying a business is a complex process that requires careful planning and execution. When preparing to buy a business, there are some important steps to follow to ensure that the transaction goes smoothly.
A very important step in the purchase of a business is the closing. The closing is the final step in the transaction and involves the exchange of documents and funds between the buyer and the seller for the final transfer of the business.
Post Merger Integration
The Post Merger Integration (PMI) is an essential part of a successful business acquisition. PMI involves the planning and execution of all activities necessary to ensure that the newly acquired business is seamlessly integrated into the existing business.
An important aspect of post-merger integration is communication. To ensure a successful post-merger integration, it is important that the companies or shareholders and/or managing directors involved work closely together and have a clear plan for implementation.
Duration of a company purchase
If you want to buy a company, you have to be prepared for a relatively long and complex M&A (mergers & acquisitions) process. The exact time frame depends on many factors. As a rule, it takes between six and 18 months to complete a company purchase.
Legal aspects in the company purchase agreement
In the context of a company purchase, there are several legal aspects that must be taken into account. These include, for example, which rights and obligations the buyer and seller agree on in the contract. The liability risks must also be carefully weighed up.
Before concluding a contract, the buyer should therefore Company purchase agreement get detailed information and advice.
Transfer of business
When acquiring a company, a smooth transfer of operations in accordance with § 613a BGB is decisive. This regulates the protection of employees so that existing employment relationships with all rights and obligations are transferred to the new owner.
The most common type is that the buyer takes over the company completely and keeps the employees. In some cases, however, the buyer may only want to take over part of the company or lay off employees.
If you decide to buy a business, it is important to find out about the different options beforehand and discuss with the seller which option is best for you.
Takeover of existing employment contracts
However, before you terminate or change an employment contract, you should definitely consult a specialist lawyer. There are a number of points you need to consider in order to avoid legal problems. As a rule, when a company is bought, all employment contracts of the previous employees are taken over with all rights and obligations. This also applies to employment contracts regulated by collective agreements.
However, the sale of the company may also result in changes with regard to working conditions, for example with regard to the place of work or working hours. In this case, it is advisable to clarify all necessary framework conditions in advance so that no stressful events occur in the later implementation.
Takeover of existing insurance contracts
If you are buying a company that already has insurance policies in place, you should familiarise yourself with the terms of the policies. This includes finding out which risks are covered by the insurance and which are not.
Even though most insurance companies take over the policies when you buy a business, you may have to pay a higher deductible or certain risks may no longer be covered.
Agreeing on a non-competition clause
If you decide to buy a business, it is important to agree on a non-compete clause with the seller. This prevents the seller from competing with you after you have bought the business. It is also advisable to stipulate this in your purchase contract. This prohibition should be for a certain period of time and is considered enforceable without compensation at 2 years. Sometimes it is advisable to include family members of the seller in the prohibition.
Liability claims
When you buy a company, you also assume liability for all claims that arose against the company before the purchase. These claims may be financial or other in nature. For example, a customer may make a claim for damages because he or she was not satisfied with a product of the business. Even if the customer suffered the damage after the purchase of the business, the new owner is liable for the damage. This can be regulated via warranty provisions and liability clauses in the purchase contract at the expense of the seller.
Liabilities
As a rule, liabilities exist that the company enters into in order to conduct its business. These can be, for example, loans, rental contracts or supplier invoices. When you buy a company, you should therefore always find out about its liabilities. Because these can increase the risk of buying a company.
Tax liabilities
When you buy a business, there is also an assumption of tax liabilities. This means that you are responsible for all outstanding invoices and taxes that the company has not yet paid. Therefore, before buying a company, it is important to check exactly what tax debts the company has and whether you can take over these. It is also important to agree on guarantee and liability provisions at the expense of the seller.
Business acquisition advice
An experienced M&A advisor can help you prepare for the purchase and develop the best possible strategy for your company or for yourself personally. The advice usually includes a detailed analysis of the company to be bought, including a determination of the company’s value, a review of strategic alternatives and a risk analysis.
In the negotiations with the seller, an M&A advisor has the task of keeping the relationship with the buyer unencumbered and assumes the role of critical questioner and purchase companion.
