Time and again, we come across entrepreneurs who run their businesses extremely successfully and achieve earnings far above the industry average. This observation applies regardless of the industry. But which component is responsible for them becoming a stumbling block when selling their life’s work?
What makes these companies so extraordinarily successful?
These companies are led by strong personalities who have fully tailored their company and its structures to your needs.
What does that mean in detail?
As a rule, we are talking about companies with a turnover of up to 5 million, where the owner is fully involved in the day-to-day business.
Important decisions always require its approval. These are made unbureaucratically and quickly, as the decision-making body is the owner himself.
There is no second management level. From the entrepreneur’s point of view, this is also not necessary, as all the strands in the company converge with him.
These entrepreneurs act multifunctionally in some cases. They are innovators, negotiate purchase and sales prices and take on the distribution function.
Why can these so successful companies often only be sold at significant discounts?
The short answer is: because they are fully tailored to the owner. If the owner leaves the company when it is sold, this can have a significant negative impact on the purchase price, as:
- suddenly large parts of the company’s internal know-how are lost,
- new structures have been set up to safeguard the know-how,
- the functions previously united in the person of the owner must be distributed over several shoulders and
- the culture of the company is lost with the departure of the owner.
For the acquirer, these are factors of uncertainty that he would normally like to see taken into account in the purchase price, since hiring new employees to safeguard the company’s performance can require a considerable amount of extra work. Not to mention the cases where the entire know-how (since it is anchored in the boss’s head) also goes with him.
In the worst case, this heavy dependence on the business owner can lead to the failure of sales talks.
What to do?
- Prepare your company in good time for the planned sale of the company and ensure that the success of the company does not depend on you alone.
- Create a second level of management to which you can distribute the functions that are united with you.
- Make sure that the know-how as well as procedures and processes are neatly documented.
- If necessary, involve a trusted key employee in the sales process. This creates security on the buyer’s side.
