Every Company sale is a long-term project that requires good preparation and implementation. A number of consultants in this country advertise their professional process know-how for business succession in order to acquire new clients in this growth market. But what do entrepreneurs have to look out for when they are looking for a reputable advisor for the Company sale are you looking for? We list important indicators for your choice of advisor. Let’s start with the ’no-go’s’.
Unsolicited contact
It starts with unsolicited advertising calls, e-mails or letters, in which allegedly targeted prospective buyers of your company are mentioned. The standard template for initiating contact is formed by countless variations of the legally prohibited advertising text of a business intermediary: ‘Our buyer department is currently receiving enquiries from potential buyers for a business in your industry as well as your region’. In this way, dubious business brokers give the impression that there are already concrete prospective buyers for your company.
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Company sale (M&A) without risk and loss of value
Fake prospective buyers
In the next step, you receive a visit from a psychologically trained sales representative. He emphatically refers to the many allegedly concrete enquiries from prospective buyers. Already in the first conversation he tries to get a referral order and usually emphasises two things:
1. a large number of concrete interested buyers
Unfortunately, this is unrealistic. On the contrary, the search for the right business successor is becoming more complicated with each passing year. Already 4 years ago, DIHK President Eric Schweitzer stated: ? that for many business owners, company succession is becoming the proverbial search for a needle in a haystack? The reality is a buyer’s market.
Serious advisors for a Company sale maintain a well-maintained database of prospective buyers over many years. In addition, they use a variety of other channels in their search for buyers. In times of a shortage of entrepreneurs, the search for potential buyers for family businesses tends to be a very time-consuming challenge,” says Ingo Claus, consultant for business succession in Osnabrück and northern North Rhine-Westphalia. Moreover, the success of a Company sales depends on many other factors. Promises of this kind are intended to speed up the conclusion of an agency contract?
But the next rotten egg is already waiting.
2. excessive company valuations
In the first meeting, the sales representative asks for your balance sheet data, your creditworthiness and your purchase price expectations. After a formal evaluation, he then presents his ?determined? sales price. sales price. And lo and behold: this is usually far above your expectations!
Here, too, the price expectation determined in this way is nonsense. It does not stand up to critical scrutiny in the form of a serious, earnings value-oriented business valuation. It is strongly advised not to jump to conclusions of this kind in an initial discussion. This practical example shows how excessive company valuations prevent successful generation changes.
From the field worker’s point of view, the ball is now urgently in your court.
High sales pressure and high monthly costs
The commission-dependent sales representative now pushes for the conclusion of a support contract with terms between 6 and 24 months. The resulting costs quickly add up to several thousand euros per month or several tens of thousands of euros per year. In most cases, however, there are no concrete measurable results.
But it can be even rougher.
Particularly dubious market participants even present profiles of potential buyers to entrepreneurs willing to sell. Subsequently arranged appointments for talks fall through a few days before the announced date with the indication that the buyer’s interest has lapsed. Force majeure, right?
And this is how you recognise reputable business sale advisors
1. trust needs time
A serious advisor for the Company sale or business succession always uses the initial contact to analyse the entrepreneur’s individual succession situation. At the same time, he presents the consulting and accompaniment options without sales pressure. Serious advisors subsequently submit a detailed offer adapted to the respective situation and do not push for the conclusion of a contract. Because trust needs time.
2. no fixed-term contracts and no ongoing flat-rate costs
A clearly structured offer makes it clear what a willing seller will pay for. These are a company valuation according to the standards of the Institute of German Certified Public Accountants (IDW-S1), a professional company exposé and support for the entrepreneur in negotiations. Serious advisors for the Company sale do not earn their money through long contract terms and high monthly flat rates. Serious advisors for the sale of businesses work to a high degree success-dependent and offset significant parts of the upfront costs with the success commission.
3. look out for this quality mark: BDU membership
Many reputable advisors for the Company sale are members of the Federal Association of German Management Consultants (BDU). As a result, they are committed in their daily work to the strict BDU standards of proper Succession advice. Integre Berater ? so auch von KERN ? Company Succession. Successful ? sometimes offer even higher standards. This applies to essential areas such as the protection of personal data of sellers and buyers or the obligation to provide regular training and further education.
4. supraregional networks
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 is represented throughout Germany, Austria and Switzerland and has an extensive international network. 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.
5. process competence
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 out 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 of interested parties and approaching them to accompanying and moderating the sales negotiations. This is an essential distinguishing and quality feature of reputable advisors for the Company sale.
6. verifiable references
Ask for references and check them by asking by phone. Neutral evaluation tools such as ProvenExperts will help you select a suitable companion for your business sale. A prestigious award, such as the jointly awarded by the Wirtschaftswoche and the BDU Consulting Prize or the award of the TOP Consultant will give you additional orientation. Furthermore, ask banks, chambers of commerce and industry or chambers of trade and commerce about their experience with advisors for Company sale in their region.
Questionable providers also often create a large number of positive references on foreign websites whose other contents usually have nothing to do with the topic of business succession. An additional look at the imprint often reveals more. These reference sites are run by private individuals or unknown companies abroad. If there is no imprint, this is always an indication that such sites are most likely purely advertising sites of dubious companies. Business broker acts.
Tips for further reading:
Calculate company value: It’s that easy
3 reasons why inflated company valuations prevent successions
Company succession in Corona times becomes more challenging
Generation change - Generation Y, not weird just different
