Putting your business up for sale is a big decision. Therefore, it is crucial to consider the process that forms the basis for selling the company. With 25 years of experience in the industry, we know which elements ensure the best foundation for a successful sales process.
In the following, we have gathered and described the areas you should consider before starting the sales process. With all the prerequisites in place, you will secure the value of the company and establish a basis for an effective sales process.
A sales process is always individual. Therefore, you are welcome to contact us on +45 70 20 04 16 or info@m-plus-a.com. This initial dialog is, of course free of charge and non-binding.
The last day as a business owner may not be the most crucial aspect when you take on the position of a business owner. Nevertheless, it holds great value to work purposefully with a development and exit strategy, as they create the conditions for the highest possible return on a sale.
The exit strategy represents the wishes and expectations of the business owner regarding the proceeds of a sale. The business and development strategy encompasses the goals that the business needs to achieve over both shorter and longer periods of time.
A clear plan for the growth and development of the business supports and increases the value of the business in preparation for a sale.
When considering selling your business, it makes sense to review your corporate structure and assess whether the structure will pose challenges in the context of a sale. If you operate as a sole proprietorship or a company without a holding company, the tax situation needs to be assessed.
The right corporate structure often helps to simplify the transfer process. In addition, the right company structure limits the buyer's costs, while the seller gets the best possible return. If sellers want to reinvest their money after the sale, the company structure also has an impact on their starting point.
Therefore, our clear recommendation is that you, in collaboration with your advisers, consider the corporate structure in which the company operates to avoid unnecessary challenges when selling the company.
How attractive it is for a buyer to take over an established and well-functioning company depends to a large extent on the organization. Has the company established an organization that ensures that it can continue operating at the same level after the sale? As the business owner, you have a great deal of influence on how attractive the company is for takeover, both in its current operation and its future prospects.
If the company reaches a certain size, it is advisable to establish a management structure that transfers management responsibilities. In smaller companies, it is often sufficient to delegate responsibilities to selected employees. The distribution of responsibilities helps to build a committed, energetic, and competent organization that ensures day-to-day operations independently of the owner.
The allocation of responsibilities to key employees requires that they will remain in the company after a sale. If a business sale of a business relies on the ongoing involvement of one or more employees, several models can be employed to retain them. For instance, you can offer the employee a stay-on bonus paid over a specified period and is dependent on the employee's employment status.
A buyer must be able to easily get the necessary overview of all the important areas of the business. Documentation of legal, financial and commercial matters provides the new owner with a solid insight into the business.
The process of ensuring that customer and supplier contracts, among other things, are up to date is also known as sales maturity - you can find more information on development and sales maturity here.
Legal documents include agreements with customers, suppliers and business partners, as well as employment contracts. These documents must be accurate, comprehensive, and transferable to a new owner.
The documentation of the financial aspects implies that all accounting matters must be documented with up-to-date figures and results. This provides the buyer a transparent insight into the individual profit centers.
The commercial aspects of the business must be documented and presented to a buyer so that they have a comprehensive understanding of the company's operational foundation and conditions.
Finally, it is crucial to align yourself with advisors who have solid and extensive experience in buying and selling businesses.
The calculation of the company's value in the context of a sale is based, not only on its current results but also on its potential.
Is there scope for expansion? Can the company expand its product range? How can the company strengthen its market position in the future?
Whether or not the potential can be realized with the existing setup will have an impact on the value. Thus, it is not sufficient that the potential is present - there must also be clarity about the conditions required to realize it.
The sales process begins with a clarifying dialogue, followed by the initiation of the valuation preparation. The valuation is always based on a well-documented foundation taking into account the historical development, important factors, and the company's potential. These important factors include, among other things, the organizational structure, production facilities, supplier relationships, and are described alongside the company's valuation.
If the valuation meets the expectations, a mandate agreement is signed and we start the process of preparing sales material and conducting market research to identify suitable buyers.
Below we have outlined the elements that constitute the stages of the sales process.
The importance of teaming up with the right advisors cannot be underestimated.
Therefore, we always recommend that you engage a lawyer with commercial insight to prepare your legal documents and contracts. With the right lawyer, the company's operations and development are positively supported. The right lawyer also supports the negotiations and due diligence process.
The documentation of the business is crucial for its value, and therefore the financial figures of the business should never be questioned. If you can provide approved annual reports during the negotiation process, you have a stronger position.
Professional advisors with commercial insight create great value for the company in both the short and long term.
Are you thinking of selling your business?
You are always welcome to contact us at +45 70 20 04 16 or info@m-plus-a.com.
It is free of charge and non-binding.
