Your company is your life's work. You have put a lot of money, time and heart and soul into it and now you want to sell your company. In most cases, selling a company is a once-in-a-lifetime event in the life of an entrepreneur and the uncertainty about how to deal with it and what to expect ? is great.ß. Many questions arise regarding the procedure, legal aspects and, of course, taxes, such as: Do I want the company to be a Sell limited liability company or as a sole proprietorship. Which can have a big difference on your personal return. We will go into these and other points in this article.
Table of contents:
- You want to sell your company? ? Clarify your goal and the strategy!
- Prepare the business valuation and the sales documents
- The market approach / the search for the buyer
- The sales negotiation and contract drafting
- Signing of the company purchase agreement and handover of the company
- Selling the company: the success factors
You want to sell your company? Clarify your goal and the strategy!
Why would you like to sell your business?
Your answer to this question is crucial: the reason for sale forms the starting point for your further strategy in the succession process.
From the dimensions Time and Money already result in various approaches for your Succession planning. Should you be under time pressure ? because you are in a Emergency situation are ? then you will probably aim for a quick business succession.
If you would like to have the most achieve a high purchase price you will negotiate accordingly and use the time to prepare your company ideally for the sale.
However, if you use the Best solution for your customers and employees then the high purchase price is not your first priority and you will put time into finding a suitable successor for your business.
And a third aspect is ? who from the immediate family and circle of friends is still affected by the business succession? Who do you need and want to bring on board? Don't try to get the Company sale in the privacy of your own home. Let your Familiar participate in your thoughts about selling the company.
Prepare the business valuation and the sales documents
The basis of every company sale is the Enterprise value. A resilient Calculate enterprise value, is not just a calculation task that a simple enterprise value calculator could take on. There are many ways to Business valuation to perform - which is why the results of the methods are often compared to determine a realistic sales price.
Therefore, the calculated value of a company does not correspond to the achievable sales value or market value. Different methods are used for a company valuation, depending on the sales strategy, such as the multiple method, discounted cash flow method, capitalised earnings method or the net asset value method.
For an initial indication of your company's value, we recommend our free of charge Company value calculator.
Together with your management consultant or M&A advisor, you then determine the Value drivers and strengths of your company. Together they draw up a business plan for the next 3-5 years in order to increase the value of the company and thus also the sales price.
Of course, the tax aspects of your planned succession are also an important preparatory topic. The taxes you have to reckon with when selling your company depend, among other things, on the legal form you have chosen for your business and whether you decide on an internal or external succession solution.
Definitely relevant taxes that you have to reckon with in your individual succession situation are income tax and, should it also concern real estate to be transferred within Germany, inheritance tax or gift tax.
Those who add a return on heart and soul, i.e. those who have too high a price expectation, will possibly be disappointed in the end. Or they may even jeopardise the successful continuation of the company.
In a detailed Information Memorandum the strengths and also the uniqueness of your company are presented. It should whet the appetite for your company.
The market approach / the search for the buyer
If there is no business successor in the family and also no employee for a Management Buy Out (MBO) is suitable and willing, then the market must be searched for a buyer.
Once again, the involvement of a reputable succession advisor with transaction experience pays off. Only this advisor can guarantee a discreet and optimised search for a buyer thanks to clear processes and a strong network!
Especially supra-regional networks are becoming more and more important due to the challenges in finding buyers. At this point, a brief note on our own behalf: KERN ? Company Succession. Successful. is represented throughout Germany, Austria, Switzerland and Poland and has a wide-ranging network of partners. international network with several thousand qualified prospective buyers (MBI) and more than 210,000 verified investor profiles. In this way, we 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.
Perhaps there are even market participants from your professional environment who would like to take over your company? The synergies this creates could lead to a higher purchase price.
Also Financial investors, entrepreneurial capital, Management Buy In (MBI) ? could be an attractive solution for your company.
The fear that many entrepreneurs have is how can I go out and find a buyer without it becoming known to my employees and the market? Feel free to let a professional succession advisor accompany you. He will conduct the search for a buyer for you anonymously and discreetly.
The sales negotiation and contract drafting
The first personal meeting is an important impulse for the further steps. The famous first impression. The potential buyers introduce themselves to the seller and woo the company!
On the other hand, sellers need to present their company objectively and transparently, highlighting its strengths and uniqueness. After receiving the first non-binding offers, the seller decides with whom to enter into detailed negotiations.
After signing a memorandum of understanding (a so-called ?letter of intent? or LOI for short), the buyer shall provide a Due diligence (the so-called Due Diligence or DD for short) is carried out. In parallel, work is often already being done on the drafting of the contract.
At this stage it is important to closely involve the tax experts and lawyers so that there are no disadvantages or unpleasant surprises later on.
Signing of the company purchase agreement and handover of the company
Is the Company purchase agreement signed, there is definitely cause for celebration! From the so-called Closing the economic transition has taken place and the greatest entrepreneurial risk has been transferred.
Now the cooperation with the new owner begins. The integration of both cultures, of both sides, is a process that takes months, sometimes years.
Appreciative cooperation is a prerequisite for a smooth process.
Selling a company: The success factors
1. create a project plan
Many sales fail because there is no plan. At the same time, this is often due to the thinking that professional advice would be too expensive.
However, the process of selling your company also costs your own working time (and this should not be underestimated) and your own energy. Tax advice and legal support are also indispensable. Experienced M&A advice requires an investment, but at the same time it takes a lot of pressure off you in this time-consuming process.
If you don't have a plan and a clear strategy that you follow, then there is no time and cost control. An uncertain undertaking.
2. involve a suitable M&A advisor
Just as you are an expert in your market segment, there are experts for the Company sale consultingalso called M&A advisors. They accompany and steer you through the M&A process and are at your side as sparring partners at all times.
Make sure that the succession advisor acts only for you, that he or she acts in your sole interest. Besides the M&A Advisor and the Project Manager you need a Tax consultant and a Lawyer. Both must have a good knowledge of the subject of 'selling a company' and the legal and tax consequences, and at an early stage be initiated into your project.
3. being a woman/master of the situation at all times
Selling a company is usually a once-in-a-lifetime project in the life of an entrepreneur. Be prepared for the unexpected. Just as you manage your company, you should also manage the project "selling the company". Put the process in experienced hands and leave the implementation to specialists. Of course, you remain, the entrepreneur, always the decision-maker and untouched in your freedom.
Communicate promptly, openly and transparently at the appropriate moment. Plan enough time ? free yourself as much as possible from day-to-day business, make yourself superfluous in perspective! Then the transition will also work better afterwards.
The process is exhausting, it is a marathon and not a sprint ? prepare yourself well mentally and accept inwardly that an Company sale procedure takes its time!
4. selling the company - also giving time and space to feelings
Give yourself enough time, don't forget the emotional side. The worst thing is to cancel the appointment the day before the notary appointment ? because you are not ready yet!
We have experienced this not only once! Get your family and close friends on board. Find a new job to look forward to! Plan your third stage of life, and celebrate your new freedom!
You can learn more about the topic of ?letting go? in the book ?company succession ? The art of letting go? by Nils Koerber, founder of KERN.
At KERN Company Succession. Successful. know about the complexity of both company sales and company succession and acquisition. For almost 20 years, our group of advisors has focused exclusively on corporate succession - Find out more in our Company sale checklist.
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