Corporate transactions are Complex processes with high risk and at the same time great opportunity. With the right strategy and experienced advice, you can successfully master the purchase or sale of your company.
Table of contents
- The road to success: a guide
- Key points at a glance
- What are corporate transactions?
- The diversity of corporate transactions: What types are there?
- Motivations behind M&A transactions
- The importance of professional M&A advice
- Buying & selling companies: A complex process
- 6 success factors for a successful corporate transaction
- Past corporate transactions of KERN
- Conclusion
- FAQ - Frequently asked questions
The road to success: a guide
Proper preparation, a comprehensive company valuation and the consideration of tax, legal and economic aspects form the basis of successful company acquisitions and sales. With the expertise of experienced consultants at your side, the phases of a transaction - from initial assessment to successful completion - can be mastered efficiently and purposefully.
This guide takes you through all phases of a corporate transaction, from initial planning to successful completion. It offers you valuable tips and information to help you minimise risks, exploit opportunities and achieve your goals.
Key points at a glance
- Definition ofCorporate transactions include changes in the ownership structure, such as purchases, sales or transfers.
- OpportunitiesThey offer opportunities for growth, restructuring, synergies and succession planning.
- Frequent transaction typesThese include Share deals, asset dealsmergers and carve-outs.
- Need for counsellingThe complex process requires professional support from M&A experts.
- Success factorsClear objectives, strategic planning, open communication and choosing the right partner are crucial.
With the specialists from KERN Unternehmensnachfolge at your side to support you in every phase - from the initial analysis and partner search to contract drafting and integration - nothing stands in the way of your success.
What are corporate transactions?
Corporate transactions are processes that change the ownership structure of a company or parts of a company. They include the purchase, sale or demerger of companies or parts of companies, as well as company mergers. The aim of such M&A transactions (mergers & acquisitions) is to achieve strategic corporate objectives such as growth, market expansion, succession planning, diversification or synergy effects.
The diversity of corporate transactions: What types are there?
The term corporate transaction encompasses various forms of company acquisitions, sales and mergers.
Different transaction types can be considered depending on the objective and initial situation:
Acquisitions are characterised by the targeted acquisition of companies or business units, either via share deals, which involve the purchase of shares in the company, or via asset deals, which involve the acquisition of selected assets. These strategies are pursued by a wide range of players, including strategic investors, financial investors and market competitors as well as individuals (MBIs), in order to consolidate their market position or develop or integrate new business areas.
Divestments reflect the strategic withdrawal, the sale of companies or divisions, motivated by the desire to streamline the portfolio, financial restructuring or the preparation of an orderly reorganisation. Company succession. This includes a diverse range of sellers, from private entrepreneurs to strategists and financial investors.
Succession planning serve to ensure business continuity through the handover to the next generation, be it family members, existing management or external successors, and represent a key strategic challenge.
Within this spectrum, the following differentiate Specialised transaction types how:
- Mergersthe creation of new business units through the merger of existing companies,
- Management buy-outs (MBO) and Management buy-ins (MBI)strategies in which management teams (external or internal) acquire shares in a company and thus represent a special form of corporate succession involving individuals,
- Spin-offs and SplitsThe company’s strategy is designed to focus on the core business by spinning off or splitting divisions,
- Carve-outsThe targeted separation of business units from a group of companies with the aim of increasing value or strategic repositioning.
Motivations behind M&A transactions
Corporate transactions in the area of mergers & acquisitions (M&A) or corporate succession are handled by primarily 5 driving forces driven.
- Growth: Companies strive to gain faster access to new markets, employees and technologies through acquisitions in order to increase sales and profits.
- Synergies: The integration of companies aims to increase efficiency by optimising business processes and realising cost synergies.
- Portfolio optimisation: Focussing on core businesses by divesting non-core units improves strategic alignment and efficiency.
- Financial restructuring: Sales serve to increase liquidity, reduce debt or reinvest in strategic areas.
- Company succession: Orderly handovers ensure the continuity of the company and its long-term success.
The specific motives vary depending on the company’s situation and the market situation, although a clearly defined objective always forms the basis for success.
The importance of professional M&A advice
Professional support for corporate transactions is essential due to the complexity and high financial and strategic importance of these processes. Expertise in areas such as company valuation and corporate law aspects, Due Diligence and negotiation management minimises risks and increases the chances of a successful transaction.
Experienced advisors recognise and navigate potential pitfalls, ensure an objective assessment and support the targeted implementation of the transaction objectives. This lays the foundation for the successful, future-orientated development of the company.
Company sale
Find out everything you need to know about selling your life’s work. In the video “Selling a company in 10 steps” you will learn about the proven KERN M&A process. Also in the video, you will learn how the founders of Acousticpearls fulfilled their dream by selling their company.
Generation change
Succession within the family needs solutions that also take the emotional side into account. Watch the video with Nils Koerber to discover the holistic KERN family process for generational change. Get the expert guide as a free PDF download.
Company acquisition
Buying a company is a big decision. Here you can find out why this path is easier, more lucrative and more exciting than setting up your own business. Discover how the KERN network can help you with your successful business purchase. Start right away by setting up your free search profile.
Buying & selling companies: A complex process
The purchase and sale of companies, whether as a strategic expansion or portfolio optimisation, goes through a precise and demanding process that extends from the initial strategy to the final integration. The 6 core phases of this process (from an investor’s perspective):
- Strategy and preparation: Definition of transaction targets and structures and identification of potential target companies.
- Initial contact and letter of intent (LOI): Initial discussions and formulation of a letter of intent, which forms the basis for confidentiality and further negotiations.
- Due diligence: Comprehensive analysis of the target company for risk and value, including financial, contractual and personnel reviews.
- Company valuation: Determination of a well-founded company value based on the due diligence to determine the purchase price.
- Contract negotiations: Negotiation of purchase conditions, including liability and warranty issues.
- Transaction and integration: Completion of the legal transaction and start of integration into the buyer structures.
6 success factors for a successful corporate transaction
The success of a corporate transaction depends on essential factors that go far beyond the financial aspects and form a solid basis for every phase of the process:
- Clear objectives and strategyA precisely defined strategy and clear objectives are essential. This includes the motivation behind the transaction and plans for future growth.
- Careful preparationThorough preparation on the part of both parties facilitates a smooth process. This includes early data preparation and methodical project planning.
- Experienced consulting teamThe complexity of M&A requires the expertise of specialised consultants with in-depth industry knowledge and experience in transaction structuring.
- Comprehensive due diligenceA detailed and objective review of the target company is crucial in order to identify risks and assess opportunities.
- Negotiation skillsSkilful negotiation, based on sound knowledge and strategic skills, is essential to achieve optimal results.
- Preparation for integrationPlanning for seamless integration starts early and is critical to the long-term success of the transaction.
Past corporate transactions of KERN
KERN Unternehmensnachfolge supports companies in all phases of the transaction. Below you will find experience reports on the sale and purchase of companies:
Conclusion
Corporate transactions play an important role in the further development of companies, sectors and markets. They open up new opportunities for growth, expansion, diversification, succession and restructuring measures. At the same time, they harbour risks, require specific expertise and are often associated with emotional challenges.
The successful realisation of a corporate transaction is the result of a combination of several factors:
- Clear objectives and a precise idea of the ideal situation after completion.
- Comprehensive market expertise and negotiating skills.
- Careful planning of all stages of the transaction process.
- Efficient project management for a smooth process.
- Professional support from experts with many years of experience.
FAQ - Frequently asked questions
What are Mergers & Acquisitions (M&A)?
M&A stands for Mergers & Acquisitions and describes the merger or takeover of companies.
What does due diligence involve in corporate transactions?
Due diligence is an in-depth examination of the company in order to identify risks and opportunities. It includes, for example, analysing the financial situation, business processes and the market environment.
Is it advisable to sell a company with or without advice?
The support provided by experienced M&A advisors offers many advantages, e.g. access to a network of potential buyers, professional conduct of negotiations and avoidance of mistakes.
How long do company sales take?
The duration can vary greatly, but is usually between 6 and 24 months.
What sales strategies are there?
There are various sales strategies, e.g. approaching potential buyers directly, conducting a bidding process or selling via an auction platform.
What needs to be considered when buying a company?
In addition to due diligence, the financing, integration of the company and the legal framework should also be taken into account.
