Selling a compa­ny between a family business and a group ? Is that possible?

Inter­na­tio­nal­ly active corpo­ra­ti­ons may well be interes­ted in your much smaller compa­ny. Can you negotia­te at eye level here? Are there any demands in the negotia­ti­on process that are rather unusu­al for a medium-sized company?

Entre­pre­neurs often ask themsel­ves how to find the right buyer for their compa­ny. This questi­on always arises when a family-inter­nal succes­si­on is not possi­ble due to a lack of suita­ble successors.

When looking for an exter­nal buyer, one is often confron­ted with the questi­on of which group of buyers comes into questi­on at all. Is it rather suppli­ers, custo­mers or perhaps even compe­ti­tors? Should the group of buyers be of a similar size on the market?

A longlist with all poten­ti­al interes­ted parties makes it easier for the entre­pre­neur and his advisor to approach them in a targe­ted manner. Especi­al­ly if this list is well resear­ched and structured.

Is it possi­ble that a billi­on-dollar corpo­ra­ti­on might be interes­ted in my small and medium-sized business? Especi­al­ly if the compa­ny has a unique positi­on in its regio­nal market, it may be worthwhile to contact a corpo­ra­te group. This is becau­se corpo­ra­ti­ons often look for market niches as part of a buy-and-build strategy.

Negotia­ting at eye level ? this is also possi­ble with corporations

Without profes­sio­nal advice from an experi­en­ced succes­si­on advisor and without a well-estab­lished network, it is certain­ly diffi­cult for the indivi­du­al entre­pre­neur to find the right prospec­ti­ve buyers. Negotia­ting at eye level can also be diffi­cult depen­ding on the size of the prospec­ti­ve buyers.

As a sole proprie­tor, can you also negotia­te with corpo­ra­ti­ons on an equal footing? -Actual­ly unimaginable.

In a recent case, however, with our profes­sio­nal support, we succee­ded in selling a small compa­ny to a group with a turno­ver of 16 billi­on pounds. The compa­ny to be sold, on the other hand, had an annual turno­ver of about 350,000 ? At the same time, however, it was a very successful niche compa­ny in the field of real estate services. At first glance, however, these were comple­te­ly unrea­li­stic ratios that did not lead to much interest on the part of the company.

Unique selling propo­si­ti­ons, growth prospects and good earnings prospects also attract large investors

However, the compa­ny for sale had some unique selling points. In parti­cu­lar, a very interes­t­ing custo­mer struc­tu­re on the one hand, but also the very high earning power on the other, made the compa­ny such a desira­ble target for various groups from the same industry.

What is important here is the correct, profes­sio­nal prepa­ra­ti­on as well as a compa­ny valua­ti­on prepared accor­ding to the standard of the Insti­tu­te of Public Auditors in Germa­ny, which stands up to inter­na­tio­nal standards. Together with an infor­ma­ti­ve compa­ny expose, these can open the doors even to suppo­sedly much too large interes­ted parties.

But this is only the begin­ning. Becau­se commu­ni­ca­ti­on between corpo­ra­te groups and small and medium-sized enter­pri­ses is often comple­te­ly diffe­rent. This starts with the commu­ni­ca­ti­on, which is often conduc­ted in English with many techni­cal terms. Then there is the fact that such large compa­nies usual­ly have special depart­ments with many well-trained employees for expan­si­on through acquisitions.

Profes­sio­nal support from an experi­en­ced succes­si­on advisor protects against overly far-reaching guaran­tee promises.

With the support of an experi­en­ced succes­si­on advisor, the entre­pre­neur can ensure that his interests are safeguard­ed 100 %. In this way, he can actual­ly negotia­te at eye level even with signi­fi­cant­ly larger corpo­ra­te struc­tures. Even mammo­th meetings with highly profes­sio­nal law and tax firms can be survi­ved without much emoti­on. At the same time, the exper­ti­se of a profes­sio­nal succes­si­on advisor ensures that the medium-sized entre­pre­neur does not have to make any conces­si­ons that are unreasonable for him. For examp­le, exten­si­ve guaran­tee promi­ses, etc. Even rights guaran­teed by law, for examp­le in the German Commer­cial Code, are often excluded by corpo­ra­ti­ons by means of a formu­la­ti­on in the purcha­se contract. If you don’t take a close look at this, you may have to deal with additio­nal claims later on. Many a tax arran­ge­ment that is conve­ni­ent for the compa­ny buyer is not neces­s­a­ri­ly favoura­ble for the seller.

Service provi­ders are also eligible.

In this speci­fic case, with the help of the tax advisor who had been associa­ted with the entre­pre­neur for years, it was final­ly possi­ble to sell the small service compa­ny descri­bed above at a price signi­fi­cant­ly higher than one year’s turno­ver. In additi­on, it was possi­ble to obtain an 18-month consul­tancy contract for the retiring entre­pre­neur and his wife. Thus, he was able to make his know-how available on the one hand and did not abrupt­ly retire from entre­pre­neu­ri­al life on the other.

About KERN - The succes­si­on specialists: 

KERN - the succes­si­on specia­lists - are the experts on the subject of compa­ny succes­si­on, Compa­ny sale, genera­tio­nal change in family businesses and compa­ny acqui­si­ti­ons in the SME sector.

Founded in Bremen in 2004, the consul­tancy is repre­sen­ted at many locati­ons in Germa­ny, Austria and Switz­er­land and accom­pa­nies family businesses in all matters relating to business succes­si­on and genera­tio­nal change. Through the develo­p­ment of indivi­du­al soluti­ons for the hando­ver of businesses, the Compa­ny sale and purcha­se ensures KERN - The succes­si­on specia­lists Compa­ny values for trans­fer­ors and successors.

Would you like to learn how to sell your business profes­sio­nal­ly? Then our free webinar “Selling a business without risk and loss of value”. just the right thing for you. Sign up right now!

Tips for further reading:

Prepa­ring for business succes­si­on - 3 practi­cal tips

How do you recog­ni­se a reputa­ble business sale advisor?

Selling a business: Why a pure success fee makes it diffi­cult to provi­de serious advice

Comment: Unresol­ved compa­ny succes­si­ons endan­ger our prosperity

Free webinars on business succession

Employee infor­ma­ti­on during the sale of a company

The adviso­ry board in family businesses


Is my compa­ny also interes­t­ing for large corpo­ra­ti­ons?

Compa­nies with unique selling propo­si­ti­ons in the regio­nal market are parti­cu­lar­ly interes­t­ing for corpo­ra­te groups. As part of a buy and build strategy, they prima­ri­ly look for market niches. In our case, the compa­ny was parti­cu­lar­ly desira­ble becau­se of its interes­t­ing custo­mer struc­tu­re and high profitability. 

How can I negotia­te with corpo­ra­ti­ons at eye level?

Profes­sio­nal advice is parti­cu­lar­ly helpful here. This ensures that the interests of the entre­pre­neur are 100% protec­ted. This takes a lot of pressu­re off, especi­al­ly in lengthy meetings. In additi­on, the compa­ny does not make any unreasonable conces­si­ons. Contracts in parti­cu­lar should be checked with profes­sio­nal precis­i­on. Other­wi­se there is a risk of pitfalls. 

How do I genera­te further interest in my compa­ny among big players?

What is important here is the right, profes­sio­nal prepa­ra­ti­on and a well-founded compa­ny valua­ti­on that stands up to inter­na­tio­nal standards. Together with an infor­ma­ti­ve compa­ny expose, these can open the doors to interes­ted parties who are suppo­sedly much too big. Another point to bear in mind is the diffe­rence in commu­ni­ca­ti­on between corpo­ra­te groups and small and medium-sized enter­pri­ses. This begins with commu­ni­ca­ti­on that is often conduc­ted in English, inclu­ding many techni­cal terms. In additi­on, there are usual­ly special depart­ments with many well-trained employees for expan­si­on through acquisitions.