Motivation in the sale of a company-Clear your WHY

Why should I want to buy a company?

As the number of takeover-ready compa­nies increa­ses, other groups of acqui­rers are incre­asing­ly coming into focus. These groups usual­ly have a wide range of experi­ence and compe­ten­ci­es, but are often less experi­en­ced in the acqui­si­ti­on process. Regard­less of the transac­tion form chosen, this group of buyers should be able to answer the questi­on “Why do I want to buy a compa­ny? KERN - Unternehmens­nachfolge, has dealt with the many social and organi­sa­tio­nal aspects in the run-up to a planned takeover. Three of these are presen­ted below.

What is often undere­sti­ma­ted when buying a company?

The comple­xi­ty of a purcha­se process is usual­ly not grasped. But a compa­ny purcha­se is a royal class. For examp­le, successful managers have gained valuable experi­ence and success during their employ­ment. Conse­quent­ly, they project these onto the acqui­si­ti­on process and deduce that they can also manage it well. Likewi­se, there are acqui­rers who have a very clear pictu­re of parts of the acqui­si­ti­on process, but do not know where to start.

Where should the prepa­ra­ti­on for a takeover start?

To avoid costly mista­kes and organi­se a successful takeover, poten­ti­al acqui­rers should be able to answer the follo­wing questi­ons, among others:

  • First­ly, the questi­on of ‘why?

Buying a compa­ny is not the goal, but a means to an end. There are many reasons for buying a compa­ny: moneta­ry, the desire to be able to shape something independent­ly, creatively, to be able to act independent­ly of higher hierar­chies. There­fo­re, the answer to your indivi­du­al ?why? must be strong enough to motiva­te you from the idea of ?buying a compa­ny? through the process to full imple­men­ta­ti­on and far beyond, and to defy resis­tance. Becau­se the second aspect alrea­dy reflects your motives against your indivi­du­al possibilities.

  • Second­ly, now it’s about you. Even if you agree with your family or other relati­ves that you want to buy a compa­ny - at the end of the day, you bear the sole respon­si­bi­li­ty. Questi­ons like: “What stage of life am I in?”, “Can I afford it finan­ci­al­ly, organi­sa­tio­nal­ly, human­ly and health-wise?”, “How do I deal with uncer­tain­ty, stress and risks? In additi­on to your own profes­sio­nal background, it is incre­di­bly helpful if you yours­elf alrea­dy have experi­ence in buying a compa­ny or if someone from your circle of friends and acquain­tances does. At this point, there cannot be enough questioning.
  • Third­ly: What about the ’sales­per­son’? What makes up his perso­na­li­ty? Asking about the motives for the sale can have a great influence on the purcha­se price and the negotia­ti­on tactics. Does the seller have pressu­re or other constraints to sell? Or does he just want to test the market value? Does he (k)have an (alter­na­ti­ve) succes­sor? Does he give a vendor loan? Which value system does he belong to? How does he manage the employees? The latter has a great influence on how you can take the employees with you on your journey. Along with suppli­ers and partners of your target compa­ny, they belong to the other important stake­hol­ders, to the ‘periphery’ of the seller.

What should poten­ti­al acqui­rers look out for?

Check your motiva­ti­on compre­hen­si­ve­ly with many questi­ons and give yours­elf honest answers. Further­mo­re, we at KERN ? Business Succes­si­on recom­mends invol­ving an exter­nal advisor with transac­tion and indus­try experi­ence in your takeover process. This way you can avoid expen­si­ve mistakes.

But you ?Why? ? you have to answer that yours­elf and you will be asked about it again and again, by the banks, by the seller, by your family. The answers to the Why? will be your driving force in the takeover process.

Tips for further reading:

Business sale vs. real estate sale

Advice traps in the process of business succession

The costs of a business succes­si­on or an M&A project

How do you recog­ni­se a reputa­ble business sale advisor?

Alter­na­ti­ves in transac­tion negotiations

Business valua­ti­on of SMEs

The 5 most important contents of an entre­pre­neu­ri­al emergen­cy kit

What are the reasons for buying a compa­ny?

In additi­on to moneta­ry reasons, the desire for autono­my and indepen­dence from hierar­chies are the main reasons for buying a compa­ny. But also the possi­bi­li­ty of being able to shape something independent­ly and creatively is a frequent motiva­ti­on for succession. 

What factors should I consider when buying a business?

First of all, there is one’s own perso­na­li­ty and situa­ti­on. After all, you should be able to afford a takeover finan­ci­al­ly, but also be able to deal with the stress. It is also helpful to have experi­ence with takeovers yours­elf or in your environment.

What do I have to consider before buying a compa­ny from the seller?

On the one hand, they should questi­on the buyer’s motives. For examp­le, possi­ble pressu­re to sell has a great influence on the selling price and tactics in the negotia­ti­on. On the other hand, his values and style of leader­ship are relevant in order to win the employees for the common path.