For many entrepreneurs, selling their own company is the crowning glory of a lifetime of business – but also one of the biggest challenges.
Successful business succession does not begin with the search for a successor or buyer, but with forward-looking preparation. Those who plan ahead not only increase the value of the company, but also its attractiveness to potential successors and buyers.
This article is aimed at owners of SMEs who are facing the challenge of business succession. It provides insight into how early and careful planning can ensure a smooth handover to successors and help avoid typical pitfalls.
Why preparation is crucial
Our experience from numerous corporate transactions shows that sellers of structurally, organisationally and financially well-positioned companies achieve significantly higher proceeds. Buyers place particular emphasis on stability, clear processes and realistic growth potential. Careful preparation builds trust between seller and buyer and lays the foundation for a successful handover.
We recommend early preparation.
It is worth addressing key issues two to three years before a possible sale of the company:
- Organisational structure: Clear roles and deputies make your company less dependent on the owner – a key criterion for successors.
- Brand and market position: Revise your positioning – your company should present itself as attractive to buyers with unique selling points and future potential.
- Financial transparency: Prepared and comprehensible figures (e.g. EBITDA, working capital, investments) form the basis of any company valuation.
- Separation of private and business assets: Private assets should be transferred out of the company at an early stage in order to create transparency and avoid tax pitfalls.
- Personal planning: Selling a company also has a major impact on personal financial and life planning. Early asset planning, including pension fund and tax issues, is crucial to creating long-term security for the period after the sale.
- Communication strategy: Develop a plan for how and when to inform employees, customers, suppliers and your environment in order to build trust and avoid uncertainty.
A well-prepared company sale is not a matter of chance, but the result of a structured process. Starting early gives you more options – whether in terms of pricing, selecting the right buyer or the handover process.
The most important value drivers
The value of a company is based not only on figures, but on the interaction of several factors. In medium-sized businesses, the following value drivers are particularly decisive:
- Profitability and EBITDA: Solid, sustainably generated operating profits form the basis of any valuation.
- Dependence on the owner: The less the company depends on its owner, the higher its value.
- Strong customer relationships: Business models with stable, predictable revenues are considered particularly attractive.
- Customer structure: A broad, diversified customer base reduces the risk for buyers.
- Market position & competitive advantages: Clear unique selling points, patents or know-how increase strategic value.
- Scalability: Can the business model grow without costs rising at the same rate? This increases potential.
- Transparent financial data: Clean accounting and transparent key figures are essential.
To develop these drivers in a targeted manner means not only to increase attractiveness to buyers, but also to increase the value of the company.
Would you like to know how ready your company is for sale? Arrange a non-binding initial consultation with our experts, who assist with several succession solutions every year. Contact us at info@hoffmann-partner.com.
About Hoffmann & Partner
Since 2011, we have been bringing together entrepreneurs and successors – from traditional family businesses to specialised companies from various industries. As experienced M&A advisors, we support entrepreneurs in all phases of the sales process – from the initial assessment to the successful conclusion. We open up access to strategic buyers or suitable financial investors. Thanks to our membership in the international M&A organisation AICA, we can also specifically target international interested parties and accompany cross-border transactions. Hoffmann & Partner also has a broad network of potential successors – from strategic buyers and financial investors to experienced leaders and motivated young entrepreneurs. We bring entrepreneurs together with suitable successors or buyers from our network in a structured, discreet and targeted manner.