What advice can do when selling a business
The handover or sale of one’s own business is a complex process that requires some preparation time. While we at Konsultori help companies to handle the handover and sale of their business well, entrepreneurs often ask themselves what advice can do and whether it is not sufficient to carry out the sale themselves. In this Insights article, we have compiled some points that can help you make your decision.
The company sale process requires broad expertise
Selling a business is a process that is not commonplace. One needs expertise in many different areas such as business valuation, legal and regulatory compliance, tax effects, negotiation, marketing (internal communication with employees, external communication with potential buyers) and finance (financial plan, financing options, deal structuring). A deep understanding of the industry and the market as well as strong communication and interpersonal skills are also important. It can also be helpful to have a network of contacts in the industry and access to potential buyers.
The challenges of selling a company
When selling a business, we see in our practice several typical challenges from the seller’s perspective that need to be overcome:
Business valuation: determining the fair market value of the business can be difficult and requires a thorough understanding of the business, the industry and market trends.
Assessing one’s market position, attractiveness and competition: There may be significant competition from other companies in the same industry or market, making it difficult to attract buyers and negotiate favourable terms. Preparing for the sale process, therefore, includes making the business more competitive.
Due diligence: The buyer usually conducts thorough due diligence, which can reveal hidden problems or potential liabilities that may affect the sale price or the buyer’s willingness to proceed.
Legal and regulatory compliance: Selling a business requires compliance with a number of legal and regulatory requirements, including securities, tax and employment laws, which can be complex and time-consuming.
Timing: Finding the right time to sell the business when market conditions are favourable can be challenging and requires a good understanding of market trends and economic conditions. Unfortunately, people often start planning the sale of the business too late.
Emotional attachment: For many entrepreneurs and business owners, selling a business can be a very emotional process, especially if the business has been built up over many years and is closely linked to personal identity. This often delays the process or leads to an unforeseen stop just before the final decision and, in the worst case, to the termination of the business sale.
Suitable buyers: it takes a while to establish contact and trust with potential buyers before the core process of selling the business can be well started. Potential buyers also need preparation time to engage in a buying process and to allocate resources, as well as to bring about the decision.
What consulting can do for the sale of a company
An external advisor can help you avoid the classic pitfalls in the handover of a business and increase the likelihood of a successful transfer or sale.
Due to the complexity of the process of selling a business, owners often call in a consulting firm. In order to select the ideal advisor, we will give you an overview of what you can look out for in order to be accompanied by the ideal advisor during your business sale.
How do you decide on the appropriate advisor for the sale of a business?
Determine your needs: Decide what type of advisor you need, e.g. a matchmaker, an investment banker, an expert litigator, or a lawyer.
Research potential advisors: Look for advisors with a track record of selling businesses in your industry. Ask for recommendations from trusted business contacts, and check online reviews and ratings.
Set up consultation appointments: Arrange consultation appointments with several advisors to discuss your goals and assess their expertise.
Assess qualifications: Consider the advisor’s experience, reputation and network of contacts. Check if the advisor has experience negotiating deals similar to yours.
Ask about fees: Make sure you understand the adviser’s fee structure and whether it is compatible with your budget.
Make a decision: After reviewing all the information, choose the adviser you think best suits your needs.
Build a close relationship: Work with your advisor to develop a clear understanding of your goals and expectations. Good communication and trust are key to a successful working relationship.
How we advise on the sale of businesses at Konsultori
At Konsultori, we do not work purely as a matchmaker but accompany our clients so that they start the process well-prepared and handle the process. Of course, we also use our own network of potential buyers and take on the role of matchmaker in combination with process preparation and accompaniment.
A key characteristic of professional advice is transparency. There should be clarity both in the scope of services and in the fee. The goal of advisory services in the sale of a company is to prepare the sale in an ideal way and to accompany it through the process of selling the company.
The exact scope of services should be clarified in a discussion with the advisor. This should be defined in writing in the form of an offer or exposé based on a detailed description of services and a project plan. The project plan is your common guide through the entire process. It also gives you the opportunity to precisely track the services rendered by the consultant.
Only in this way is it transparent for you as an entrepreneur exactly which services you will receive from the consultancy. In addition, you protect yourself from surprises and an explosion of costs.
Speaking of costs: The second essential component of transparency in the sale of a business is the advisor’s fee. Advice on the sale of a business is time-consuming and therefore also cost-intensive. Advisors use different fee models in the sale of a company.
It is important for Konsultori to accompany its clients through the entire process of selling a business, which is why we offer packages for services. We distinguish between time-dependent components in the sale of a company, such as negotiation support for package services (preparation of documents) and commissions in the event of success, against which upstream costs can be offset.
Konsultori’s service portfolio in detail
We are happy to support you in your project:
- Analysis of the content of the measures to be taken before the handover
- Decision support for the exit option and planning of the process
- Process support
- Business valuation and financing
- Coordination with external experts such as lawyers and auditors
- Search and negotiation with candidates for internal or external handovers
- Support on the topic of handover within the family by experts from the network
- Support in the post-transfer phase in the reorientation and strategic alignment of the company
Special focus: The person behind the company
For most entrepreneurs, their own business is a matter of the heart. A lot of time and energy has gone into it. Sometimes it has cost a lot of nerves. Letting go of your own business can be a difficult process. You can only be well advised in business succession if the advisor not only looks at the figures but also at the people and their feelings. After all, the process of selling a business is a long one. Good cooperation between the advisor and the entrepreneur already eliminates many stumbling blocks.
Succession planning on the EU agenda
The EU is also addressing the issue of succession planning, especially for small and medium-sized enterprises. The DANAE programme (Developing Advisors in a Novel Business Transfers & Acquisitions Environment), has certified experienced experts on the topic of “Advisors in a Novel SME Transfer”. After successfully handling several succession projects, such as assisting Karin Haffert with the transfer of beechange or Sonja Hager with the transfer of Strickwerk, Petra Wolkenstein was able to successfully participate in the first round of certification in March 2017.
Experts Group “Business Transfer”
The Experts Group Business Transfer offers entrepreneurs a contact point and platform. Qualified experts in business succession are listed here. This group brings together consultants throughout Austria who have special know-how and relevant experience in the highly complex area of business handover/takeover. On the WKO homepage, the consultants are grouped per province. This way you have a list of experienced experts in your area with just a few clicks. Due to 15 years of experience in M&As, the Experts Group Konsultori took up in 2017.