Business development and sales maturity are often mistaken for one another, but they are distinct concepts. Sales maturity refers to the phase in which the business fundamentals are reviewed and optimized specifically for selling to a defined buyer profile. On the other hand, business development involves implementing a development plan that supports the achievement of a solid business foundation and daily processes.
In the following, we have outlined the areas that can advantageously be prioritized in the development of your business. These areas have a direct impact on the value of the company. It is important to distinguish business development from sales maturation, which involves optimizing the business specifically for the buyer profile and maximizing the seller's exit strategy.
An appropriate corporate structure provides the necessary flexibility for the sale of the business. Before launching a sale process, it is therefore relevant to review the company's corporate structure. An appropriate corporate structure simplifies the transition of the business to a new owner and maximizes the best possible return for the seller.
This involves considering the distinction between a sole proprietorship and a company, as well as wxploring and the possibility of etablishing a holding company.
An assessment of the company structure should be made in a timely manner, as restructuring from a personally owned business to a companytypically involves a lock-up period of 3 years. Therefore, planning for such restructuring should be done well in advance.
As a general guideline, we typically value a company based on a solvency ratio of 25%. Therefore, it is common to work on streamlining and improving the balance sheet prior to transferring the ownership of the company to a new owner.
Reducing accounts receivable from sales and debt to financial institutions are among the items that can streamline the balance sheet. Additionally, if the company owns a property, selling it to another company can further contribute to streamline the balance sheet.
The specific items that contribute to an optimal streamlining of the balance sheet depend on the unique circumstances of each company
If the operation of the business relies heavily on the presence of the business owner, the management structure should be reviewed. Depending on the size of the business, establishing a middle management level or delegating responsibilities to key employees will add value. Another option to consider is hiring a professional director to ensure effective management.
A clear division of responsibilities is not only important when transferring business ownership to a new owner, but also essential in cases where the business owner is temporarily or permanently unable to participate in the daily operation. This ensures that the business can continue to function smoothly even in the owner's absence.
As part of the process, it is advisable to document and describe the workflows and processes within the company. Well-documented processes not only support efficient operations but also facilitate the onboarding of new employees. Therefore, it is beneficial to have them properly documented before considering a sale of the company.
A sustainable business is not only a goal prior to a sales process, but also has significant benefits for day-to-day operations. It directly contributes to the overall value of the company.
Well-documented agreements and contracts not only help to ensure day-to-day stability. When it comes to selling your business, the contractual framework also plays a crucial role.
The existence of written agreements with customers and suppliers is one of the most important areas to pay attention to. Depending on the size of the customer and/or the importance of the supplier to the production, the lack of contracts can pose a varying challenges.
If contracts have been concluded with customers and suppliers, it is important that a new owner is able to assume these contracts. This consideration relates to the corporate structure, as contracts concluded with a personally owned business may need to be renegotiated before being transferred to a new owner. Agreements concluded with a company can generally be transferred to a new owner. However, attention must be paid to any change-of-control clauses within the contractual framework.
A solid contractual framework that can be smoothly transferred to a new owner enhances the value of the business.
The above areas related to business development should be initiated early in the ownership to establish a strong and well-managed business.
The solid foundation facilitates the sales maturation process in the sales process, where the optimization of the company is aligned with potential buyer profiles and their bids.
The need for and extent of a sales maturation always vary for each company.
Are you considering selling your business but unsure if it's ready for sale?
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