Most entrepreneurs underestimate the complexity of the sales process for their own business. Although family entrepreneurs seek advice from specialists on many other topics, they often take the sale of the business into their own hands. After all, who knows the DNA and the strengths and weaknesses of a company better than the boss ? As captain on the bridge, he has often steered his company safely through difficult waters.
But a company succession is not only a complex project from a technical and organisational point of view, it is also very challenging emotionally. This clearly distinguishes succession from the day-to-day business of a family entrepreneur. And, unfortunately true: the succession process ties up a lot of time, attention and energy parallel to the day-to-day business.
Basics webinar presented by Nils Koerber
Company sale (M&A) without risk and loss of value
Because the typical shoals of a succession process, also called M&A process are once again clearly different from day-to-day business - Is there perhaps a pilot who, together with the entrepreneur, guides the succession process safely to its goal?
In this article, you will learn what a business succession advisor has in common with a pilot, and what concrete benefit you havewhen they bring him on board for their business sale advice. We will tell you how to improve your succession capacity and then the of your company and increase the value of your company through a targeted optimisation of your business model.
Table of contents:
Attention: Are you really ready to let go?
From a large number of successful company successions we know how difficult it is at first for the owner himself to find clarity for himself, to let go and to get involved in the process of company succession in the first place.
No wonder, since the entire life’s work is often at stake here, 30, 40 or even 50 years of dedication, deprivation and lifetime achievement - who, if not me, could lead the company through the next epoch?
But also the lack of one’s own future perspective, the honest answer to the question: What am I burning for in the future, what subject do I want to devote myself to passionately and comprehensively after the handover?
The advantages of a company sale consultation
A M&A consultingwhich focuses exclusively on the topics of business succession, Company sale and Company acquisition specialised in medium-sized businesses, works like a pilot who navigates you safely into the harbour you are heading for for the first time in your life. He knows about the decisive success factors during a sales process. The advantages of being able to draw on the practical experience of this expert are obvious:
1. security through professionalism and experience
A key success factor in the Company sale or business succession is a high level of process competence. Many generational changes fail, for example, because they are only thought of on the basis of the tax concept. Therefore, when choosing your advisor, make sure that the process of business succession includes all possible stages from comprehensive preparation, selection and approach of interested parties to support and moderation of the sales negotiations. This is an essential distinguishing and quality feature of reputable advisors for the sale of a business.
2. preparation through strategic value enhancement and successful negotiation management
A good succession advisor will start by making a statement about the succession capacity of your company and this is defined with a view to the business model.
In the preparation phase, your current business model is put through its paces. Does your company still generate sustainable income after paying a standard market entrepreneurial wage? And what about the second management level within your company, is there one at all? If not, is its establishment on your immediate to-do list. And if yes, how independently can it act during its absence? This question will ultimately also concern the future acquirer.
How good is your company actually against Cluster risks How are we positioned on the supplier and customer side? What strategic measures should be taken to optimise existing imbalances if necessary?
Keyword imbalance. In preparation for your succession, a Balance sheet adjustment to carry out. You will receive valuable tips on how to present the values of your company transparently with a targeted balance sheet adjustment. This applies above all to hidden reserves such as pension provisions or real estate in the balance sheet. If possible, these should not remain dormant, even if this increases the tax burden in the short term. Separating the areas between the former shareholder and the company to be sold in good time usually already improves the balance sheet ratios. This first part shows you where you stand with your company today and where the future potential of your company lies.
Especially in the early preparation there are interesting possibilities for optimisation.
In this step you already receive Concrete suggestions that can be implemented immediatelythat will help you to current business operational successful to design
What can you do concretely?
Try to put yourself in the role of the future acquirer: For what reasons would he buy your company?
Now it is important to put this future fantasy into practice with concrete ideas during the succession process. From the realisation of individual weaknesses, you can now work concretely on improving existing processes and procedures. Possibly you will receive hints about new profitable sales channels. In this way, you can increase your turnover and profit potential and make your business model fit for the future. In short: You develop a concrete succession story for your company successor within the framework of the sales process.
Successful negotiation
The greatest advantage of an external succession consultancy lies in the Objectivity of the advisor. Only an outsider can bring together the concerns of all those involved in the succession process without reservation.
Since a company succession usually only occurs once in a generation, the corresponding experience is lacking. The large number of legal, tax, business management and above all emotional stumbling blocks in the M&A process alone make the involvement and Moderation of an experienced expert is worthwhile. Also with the Solution orientation the advisor’s experience accumulated through the large number of mandates is very helpful.
Since different opinions and assessments of the company’s value often lead to complications, an objective company valuation by an expert is recommended right at the beginning of the process.
3. discreet and optimised buyer search thanks to clear processes and strong network
The business succession market is characterised by a large number of regional advisors and a few business succession specialists with supra-regional or international networks. These supra-regional networks are becoming increasingly important due to the challenges in finding buyers. KERN ? Company Succession. Erfolgreicher has offices throughout Germany, Austria, Switzerland and Poland and has an extensive international network with several thousand qualified potential buyers (MBI) as well as a large number of regional advisors. more than 210,000 verified investor profiles. In this way, they combine the excellently maintained regional networks to banks, tax advisors, lawyers and associations with the advantages of a supra-regional network. This combination increases the speed of sales processes enormously.
What should be considered when choosing a succession consultancy?
Anyone who gives advice must, as the term “advice” implies, have a wealth of experience that enables them to give advice in any situation, no matter how complicated.
Therefore, pay attention to the Experience, on verifiable references and Seal of approval if you want succession advice. Those who have experience can also clearly prove this with comprehensible references.
Many reputable consultants for the sale of businesses are members of the Federal Association of German Management Consultants (BDU). As a result, they commit to the strict BDU standards of proper succession advice in their daily work.
Integral advisors, such as KERN ? Unternehmensnachfolge, have set themselves even higher standards in some cases. This concerns essential sub-areas such as the protection of personal data of sellers and buyers or the obligation to provide regular training and further education.
Characteristics for reputable M&A advisors
Tip: You are welcome to form your own opinion and read herehow our customers rate the various projects and references in different sectors.
What can you expect from our KERN advice?
We distinguish ourselves from the competition on the basis of five essential characteristics:
- KERN Beratung focuses exclusively on business succession nationwide - on nothing else. That is why we can offer you expertise in depth.
- We not only advise you on the purchase or sale of a company, but are also professional companions for intra-family changes. Almost all partners have additional qualifications as systemic coaches or mediators. Each KERN partner has either experienced or accompanied succession in their own environment.
- Our home is the medium-sized business sector. What counts for us is your trust and not the term of a contract. That’s why we are one of the few firms that refuse to be bound by a contract for a certain period of time.
- Our work is strongly success-oriented. We do not charge monthly flat rates, but a fair and transparent system of services and compensation. In terms of credibility and integrity, this is a very central value of KERN Consulting.
- We work in Germany, Austria, Switzerland and Poland with state-of-the-art analysis and process technology coupled with a great deal of expertise from our partners at the locations - for your benefit, for your individual business succession.
- The sale of your business is of utmost importance to you - We guarantee the sale of your business. With the unique CORE M&A SUCCESS GUARANTEE get your money back if we don’t succeed in selling your business. Secure the sale of your life’s work at 100%. Learn more about our Guaranteed success.
Tip: You are welcome to form your own opinion and read herehow our customers rate the various projects and references in different sectors.
Goals of the company sale consultation
Classic objectives of a company sale consultancy are the preparation and safeguarding as well as the loyal and trustworthy support and representation of interests in the regulation of the company succession.
The realisation of the maximum sales price, taking into account a win-win situation, e.g. by using a holding company to sell your Sell limited liability company. Or a strategic repositioning of the company are also fixed objectives. As are a successful transaction process and an optimal closing, which naturally includes a successful future for the company.
The process of a company sale consultation with KERN
| 1. fitness check in preparation for the sale of a company. Possibly followed by a strategy to massively increase the value of the company for 1-3 years. |
| 2. preparation of company analysis, purchase price calculation, company exposé and teaser |
| 3. conception of the individual sales strategy for the company |
| 4. active search for buyers and/or investors |
| 5. pre-selection of target buyers/investors |
| 6. contacting the selected potential buyers/investors. |
| 7. coordination of the information talks and signing of the Memorandum of Understanding (Letter of Intent) to purchase the company |
| 8. evaluation of the prospective buyers and offers with subsequent selection of the final negotiating partner. |
| 9. coordination of the company’s risk assessment (Due Diligence), see also Due Diligence Checklist |
| 10. conducting the negotiations on the Company purchase agreement |
| 11. signing of the contract (Signing / Closing) |
The process of a company sale consultation according to the BDU - Bundesverband Deutscher Unternehmensberater (Federal Association of German Management Consultants)
Step 1 - The preparation phase
- Analysis of the initial situation
- Determination of the personal position of the entrepreneur
- Retirement provision and setting the course for inheritance arrangements
- Emergency planning
- Company analysis
- Estimated duration of the preparation phase: approx. 3 - 6 months, approx. 3-6 appointments for the seller
Step 2 - Planning phase
- Determine the form of the handover
- Corporate planning
- Valuation and asking price
- Tax and legal implications of the business transfer
- Search and selection of the successor
- Estimated duration of the planning phase: approx. 2-6 months and approx. 5 ? 15 appointments
Step 3 - Realisation phase
- Business handover with all business, legal, social and psychological components (induction, responsibility, introduction, financing, contracts, etc.)
- Negotiation
- Purchase price agreement
- Estimated duration of the planning phase: approx. 2-3 months and 5 ? 10 appointments
Step 4 - Start-up phase
- Company management by successors
- Stabilisation of the company due to change/stress caused by takeover
- Estimated duration of the planning phase: approx. 3-6 months and 20 ? 40 appointments
Succession planning standards According to the Federal Association of German Management Consultants BDU
Company sale checklist
How do you successfully plan the sale of a business?
The Company sale procedure is a real challenge for most entrepreneurs. After all, those who have built up and successfully managed their company themselves are often overwhelmed with the different process of business succession. Often, the process itself is underestimated.
However, with the help of concrete checklists, the handover can be divided into different project phases and the entire procedure can be better structured and coordinated.
The KERN business succession checklists contain all the information on all the important phases of the succession process and offer guidance from preparation through to handover and the start-up phase. Click here for the Company sale checklists.
The challenges of selling a company
The sale of companies in the SME sector is one of the greatest challenges for the economic development of many regions. This is because company successions that take place too late reduce innovative strength and delay urgently needed investments. The resulting reduced competitiveness of companies and the loss of know-how endanger jobs and our prosperity. Which brings us directly to your corporate responsibility.
What does this mean in concrete terms for your company sale?
Accept the challenge and shape your future. For the benefit of your family, your employees and your life’s work.
Define concrete goals for your succession
To avoid perspective difficulties in the sales process, you should define concrete personal and business goals in advance. This sounds trivial, but for many entrepreneurs who have built up a long-standing emotional bond with their company, it is perhaps even the greatest challenge in the handover. If this step is not taken, complications in the further process are pre-programmed. Therefore, it should be clear in advance whether, for example, the entire company or only certain shares are for sale.
Read or listen to the book “The Art of Letting Go” as an animation for your decision-making process: https://www.kern-unternehmensnachfolge.com/buecher/
Clarify your finances
What financial resources will be available to you in the future for your livelihood? For example, do you still want to work in the business yourself after the sale or do you want to exit completely? This clarification is therefore important in order to be able to assess whether the sale of the business or the business purchase price should represent an essential financial cornerstone of your retirement provision or whether other objectives of the sale of the business can come into focus. Allow for negotiating leeway accordingly.
Determine the enterprise value
Many entrepreneurs make the mistake of either overestimating or underestimating the value of their company. The Business valuation therefore plays a very important role in the entire succession process. Since there is not just one company value, it is important to know and compare the most important procedures with their advantages and disadvantages. By applying different valuation methods, you can look at your company from different perspectives and ultimately obtain a value corridor. You can read about which procedures are available and which calculation principles they are based on in the article Calculate enterprise value.
Or you can simply try out the free online company value researcher to find out where the current value of your company might lie: https://unternehmenswertrechner.com/
The targeted search for a suitable successor
Systematic buyer search involves identifying, approaching and selecting prospective buyers. This represents one of the greatest challenges for the company seller. The success and existence of the company, jobs and the achievement of an optimal purchase price depend on it. A systematic search for buyers generates a greater and qualitatively higher demand and thus helps to maximise the proceeds of sale and ensure the continuity of the entrepreneurial work.
Engage professional advisors to support your systematic buyer search
A professional search and selection of prospective buyers for the sale of the company form a good starting point for the successful implementation of the subsequent steps in the sales process: initial talks with prospective buyers, company inspections, examination of the company by prospective buyers due diligence, letter of intent, purchase price and purchase contract negotiations, signing and handover of the company.
The temporal dimension
Last but not least: Plan enough time for the sale of your business. The sometimes small-scale process leading up to the signing of the company purchase agreement can sometimes take longer. Therefore, planning should start as early as possible. Six to nine months should be taken into account for the preparation and the first sounding out of interested parties alone. The actual sales negotiations can drag on for several more months.
Which advisory approach is the right one for you as an entrepreneur?
KERN Business Succession recommends these four approaches:
- Entrepreneur is still very hesitant about the decision -> Develop a goal for your sales solution -> Change of Staff Seminar
- Entrepreneur wants, but would like to find out if the company is also ready for the company sale -> Fitness Check
- You and your company are ready for sale and would like to work on your personal roadmap for the sale of your company yourself -> Online seminar on the sale of a company
- Personal conversation, free of charge and without obligation
Frequently asked questions during the company sale consultation
- How does succession counselling work?
- Which M&A costs arise during a company sale consultation?
- Which Valuation method should I apply for my company?
- What are the current tax aspects to be considered in the case of an intra-family succession?
Conclusion: Professional advice for your business sale always pays off.
At KERN Unternehmensnachfolge, we are aware of the complexity involved in both the sale of a company and the succession and acquisition of a company. For more than 15 years, our group of advisors has focused exclusively on corporate succession and, thanks to this experience, can now solve in depth all the questions and tasks that are of importance to entrepreneurs and companies in these important concerns.
Take advantage of one of our company sale consultations in over 30 locations in Germany, Austria, Switzerland and Poland and benefit from a successor pool of several thousand qualified prospective buyers (MBI) as well as over 210,000 verified investor profiles.
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