Company succession - five steps to selling your own company
A satisfactory business succession means more than just money. When entrepreneurs sell their life's work, it is also about emtions. If the company is to be viable and successful in the long term, it pays to carry out the search for a suitable buyer very carefully.
For entrepreneurs it is the last big milestone when they have determined the takeover succession, they can successfully hand over the responsibility. But often emotions are also one of the biggest challenges. A structured approach, see also the wealth advice leaflet at the end of the text, increases the chances of a successful sale and an interpersonal handover of the baton:
1. preparation
As soon as it has been determined whether the company is to remain in the family or be sold, it is necessary to decide whether external expertise is required. In most cases, it makes sense to involve specialists in the evaluation and settlement. The roles of the parties involved must be clearly distributed, and the chemistry must be right. It is also worthwhile to go through the sales process and the associated communication in detail.
It also makes sense to provide a comprehensive, transparent and truthful company portrait, possibly combined with a Q & A
for potential buyers. After these preparations, a price range should be established that is comprehensible for interested parties. The valuation of the company serves as a basis, which should be calculated and documented using different methods.
2. define buyer groups
Professionals use proprietary, public and private databases to list potential buyers and then narrow down that list. Potential buyers include employees, competitors, customers, suppliers, entrepreneurs, private equity firms, investment companies or private investors. A communication concept accompanies the call for entries in relevant magazines and Internet platforms. It is essential that the call for bids be anonymous: If customers or employees learn about the planned sale too early, enormous damage can result.
3. pre-selection of potential buyers
This is followed by the pre-selection. Confidentiality and discretion have top priority in the first contact with potential buyers. Before the seller discloses his identity, the interested parties should sign a non-disclosure agreement. This must explicitly exclude the possibility of a prospective buyer contacting customers, suppliers or employees without consultation.
It is important that the agreement also includes persons and companies who obtain information in the sales process. Only when confidentiality is guaranteed is detailed information about the company and the financial framework disclosed and potential buyers invited to visit the company.
4. due diligence and sales negotiations
The fourth step is to obtain initial offers. A letter of intent with the buyer's vision for the next few years can show where the journey is headed. If these steps are successful, the next step is to carefully examine the object of purchase, the so-called due diligence. This facilitates the purchase decision, for example on the basis of business and legal risks, and should definitely be carried out in collaboration with experts.
Guarantees are an alternative. In the case of a management buyout or a family-internal succession, the buyers know the company so well that due diligence seems superfluous - but it is recommended in any case.
5. contracts, financing, handover
Once the parties have agreed on the key parameters, they draw up a draft contract. The financing arrangements are central to this. There are several options for financing; for example, with debt capital from a bank and/or via an acquisition holding company. More and more common
are so-called earn outs, in which the buyer pays off the company in installments. For the financing and the professional communication of the sale, it pays to consult experts. Once all the details have been clarified, the definitive contracts can be drawn up and the handover can be arranged.
Succession planning: tips for the successful sale of a company:
Succession planning is very demanding. Many entrepreneurs therefore put it on the back burner. But in doing so, they not only jeopardize the continued existence of their company, but also their retirement provision.
Careful succession planning is crucial for the optimal handover to a suitable successor and thus for the continued existence of the company. Last but not least, entrepreneurs secure their income after retirement, save taxes and secure assets for old age.This Leaflet (free of charge) shows how best to approach your succession planning and what you should bear in mind when selling the company.
