Selling your business is quite an undertaking. Currently, you are still the hub and engine of your business: the ‘spider in the web’. But after the business transfer, your company stands on different and separate legs.
The road to a completed and responsible business takeover has many challenges. There are several ways to improve that business transfer process.
This will lead to better sales results without stagnation or frustration. We share nine tips to achieve a responsible completion under excellent conditions regarding businesses for sale Europe.
9 Prime Tips for Selling Your Business in Europe
1. Take the time for a business transfer
Number 1 is: ‘take your time for business transfer’. This is often the most difficult challenge for entrepreneurs. Because many entrepreneurs are not thinking about quitting. After all, they are comfortable in the saddle.
Their business is doing well. So why think about business succession? Entrepreneurs are also people with a healthy dose of perseverance. Taking a step back? That doesn’t quite fit the thinking. But therein often lies a major pitfall.
Selling My Business
Often the business has to be sold when there has been a nasty incident. There have been unpleasant disappointments. Or worse: health is failing. If you are ahead of such a situation, you will be in a stronger position. The time and opportunity will then be yours to take matters into your own hands. There is no better basis for getting started with business transfer than.
2. Develop a new emotional balance
A business takeover is also saying goodbye to your company. This is also primarily an emotional process. You need to develop a new orientation for your future. If this is not between the ears, it gnaws at you during the business transfer process. Buyers get frustrated.
They do not see the owner letting go of the company. The owner permanently, unconsciously, and unintentionally manifests himself as a spider in the web. Finding the right emotional balance in good time will create the support and capacity within your company to manage without you as the driving force.
The business transfer can then take place without shocks or discontinuity. The buyer of your company will benefit. And you are bound to benefit from that success.
3. Develop an adequate investment policy
An important element is investment policy. Investments are often intended for the longer term. And the horizon in which investments will pay off is often behind the moment of transfer. By making in-depth investments, the company is actually already laying down business and strategic choices.
And that may also push the buyer into a course he does not consider desirable. The right balance between necessary and desirable investment is needed. Enough to prevent your business from being eroded. Sufficient for new choices and directions for your business successor.
4. Improve your cash management
An important key is cash management. The key question is always: how much capital has your business tied up for your company’s working capital? To what extent are your company assets tied up in inventories, debtors, or works in progress? How can the turnover rate (so-called cash cycle) be improved?
If steps are made there, cash flow already flows into the business immediately. This can then already be distributed as a dividend (untaxed under the participation exemption). Before you actually have a potential buyer in sight, you can already start the cash flow ringing this way.
5. Work on value drivers
Value drivers are the pillars on which the value of your business rests. Value drivers are found in many aspects of your business. It sometimes takes a little searching, but then solutions are quickly found.
What about containing your company’s dependencies: your staff, your suppliers, your customers, a narrow market segment, and a flexible cost structure? But also: consistent financial performance and good business predictability.
By starting to work on value drivers in good time, you will build your company’s surplus value and surcharge on the business transfer.
6. Ensure sufficient buyers
Sometimes the sale of a business gets hung up on a casual passer-by offering himself as a buyer. It looks like betting on one horse. This can turn out well. But the opposite is more often the case.
Exploring the possibilities with several parties will help achieve the right mix of conditions. An optimal sales transaction is an appropriate mix of sales price, financing conditions, earn-out, guarantees, transfer et cetera.
Negotiating with prospective buyers is more comfortable with some alternatives in reserve.
7. Get a substantiated valuation
Performing a valuation is specialist work. Historical financial performance and asset position and future cash flows are important ingredients for a solidly substantiated asking price. The better this asking price is substantiated, the more solidly it stands in negotiations on the business acquisition.
A well-founded valuation is a good guide in price negotiations. With solid and quantitative arguments, you will achieve the best sales result.
8. Take a targeted approach
A goal-oriented step-by-step approach helps you achieve your sales targets. This is without too much cost and effort! You not only need to sell your business. You also need to keep your business running at a good level financially.
A busy and exciting time. A targeted approach helps you keep the train on both tracks. The targeted acquisition is backed up by a confidentiality agreement. This way, prospective buyers come into the picture with the right professional and financial orientation.
Provide a solid sales memorandum with starting points, price information, and conditions. This will get you to the essence of a viable transaction faster. At an early stage, explore the bandwidth among prospective buyers so that only you put your precious energy into the promising options.
9. Get guidance for an acquisition advisor
Last but certainly not the least tip: engage a good advisor. He has specialist knowledge that will get you the maximum sales result. Unlike you, this takeover advisor has no emotional attachment to your company.
He or she can oversee and clarify the actual consequences of choices. He or she takes work off your hands. And such a good advisor pays off. And what is a good adviser? Don’t just go with any fancy talker. Pay attention to important aspects like knowledge, skill, and experience.
Selling a business (or buying a business) may be a one-off event for you. Look for someone who is communicatively strong. Someone who can connect viewpoints and come up with creative solutions. Someone who can defend firm positions but also unite views.
Someone who understands his profession: who oversees the legal, fiscal, and business economic aspects. Such an acquisition advisor pays off.
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