Selling a company? 10 tips for the successful sale of a company
Starting a business and making it a success takes hard work and dedication. But there may also come a time when you decide to sell your business. Selling a business is not an easy task and requires a lot of planning and preparation. In this article, you will be presented with 10 tips that can help you successfully navigate the process of selling your business.
1. Before the sales process, define the terms on which you want to sell your business
Why do you want to sell your business? Have you made a conscious decision to do so and weighed up all the pros and cons? Selling your company often means parting with your life’s work. It is not a decision that should be taken lightly. The motives can be different. Do you want to find a successor for your company? Is your goal merely to sell shares? Make a fixed decision regarding your desired future for the company. Determine for yourself what the ideal buyer or partner looks like.
2. Choose the right time for the sale of your business
Also important is the timing of the sale. Ideally, the company should be sold when it is running very well and independently and will probably continue to run well in the future. If, on the other hand, you plan to sell when the company is in crisis or you are no longer able to run the business, you will be depriving yourself of a good negotiating position. In addition, the current market value can be increased at the optimal time. The key is that you are not under any pressure to act at this point. Instead, take advantage of your good positioning and get individual advice.
3. Obtain professional advice on tax and legal issues related to the sale
The sale of a company is a very complex process that is underestimated by many company owners. Tax and legal issues also must be dealt with, and certainly numerous questions arise in this context. Here, too, you should take advantage of the experience of specialists in the fields of law and taxation. In this way, you can be sure that you have all the necessary documents with the correct wording when it comes time to sell. The same applies to various insurance, employment, and liability contracts.
4. Take your time and plan the sale of the company thoroughly
A company sale can drag on for several months to years. Thorough preparation is the first step towards a successful sale. So, plan enough time and get professional help with the organization. Selling your company is a very emotional matter, which leads many owners to put off the sale for many years, until suddenly the day comes when action must be taken. However, appropriate preparation for the sale of the company should ideally be started two to three years in advance, depending on the complexity of the company model.
5. Hire an experienced M&A advisor
Among the essential questions you should ask yourself before selling is this one: How do I find a buyer for my company? Here, too, it pays to rely on professional support. At Conpair, we have already been able to assist numerous entrepreneurs from the SME sector with the sale, from consulting to investor search to the successful conclusion of the contract. Benefit from the broad network of a professional M&A advisor.
6. Have a meaningful sales offer drawn up?
How high should the selling price be set? Try to take the buyer’s point of view here. Many entrepreneurs overestimate the value of their company, neglecting the fact that potential buyers are valuing the business from a yield perspective. In this case, it is highly recommended to consult an expert for an objective business valuation. In this way, unrealistic price expectations can be avoided, which would otherwise become a major obstacle in the sale.
7. Be honest and transparent with potential buyers
A company rarely has even the smallest vulnerability. However, hiding them can have negative consequences. A flawless preparation of all documents with all facts presents you as a professional and serious seller. In particular, experienced prospective buyers pay attention to all the little things and quickly sort out dubious offers. So, pay attention to complete, correct, realistic, objective as well as fact- and data-based documents. If a potential buyer finds defects himself, there is a risk of a severe price reduction and, in the worst case, no deal can be made.
8. Show potential buyers what valuable assets your company has
When selling a company, it is very important to show the true profitability of the company. If there are unprofitable assets, these should be eliminated or sold. In the case of medium-sized companies, privately used assets are often acquired through the company and capitalized in the balance sheet. These can be separated from the company without affecting the company’s operations.
9. Plan the handover of your company carefully and inform your employees at an appropriate time
Upon successful completion of the transaction, the new owner assumes the employer’s position. This also means that all rights and obligations arising from the employment relationships are taken over. Before the handover of the company is due to take place, it should be ensured that all jobs have been secured. Thus, ensure open communication to your employees at the appropriate time.
10. Let it go
Selling a company demands a lot from an entrepreneur, both on a business and an emotional level. Especially in the case of family businesses that are to be handed over to a new owner, the sale represents a decisive break in both professional and private life. A professional M&A consulting knows about the emotional challenges and supports you from the beginning, so that you can mentally prepare for the separation and let go of your business.
Overall, a company sale is a lengthy, complex, and upsetting process for entrepreneurs. In order to be able to concentrate on the business until the sale, it is helpful to get support from a professional M&A consultancy. This way you can be sure to find the right buyer and hand over your company to a successful future.
Buyer or company succession wanted?
Are you thinking about selling your company? Then we will be happy to assist you. We will guide you through the complex process and support you in finding the right investor. Leave the work to us so that you can continue to take care of the day-to-day business. Get in touch today – we look forward to hearing from you!