Describe a Company's Current State
The foundation of the entire sales process is a comprehensive presentation of the current situation.
This includes a description of the company as well as its key success factors and opportunities—the hard facts that enable prospective buyers to get to know the company better and assess its market position. The goal is to consolidate key information about the company and systematically gather company-specific data and factors.
For example, how the business model is structured and how it differentiates itself from the competition. Or exactly what the value creation structure within the company looks like. It is important to make the company transparent and understandable for all stakeholders—and thus to accurately reflect its market value. Prospective sellers should be supported right from this early stage of the project, when it comes to examining the company from an external perspective. The right questions must be asked, the company data analyzed, and the factors contributing to the company’s success identified. These factors may include, among other things, the sales landscape in which the company operates—and which customer groups are thereby targeted.
Describing the Current State: An Outside Perspective Helps
Prospective buyers typically work closely with consultants. This is because, in addition to assessing business potential, the goal is to uncover blind spots, realistically evaluate weaknesses and risks, and incorporate them into the sales strategy before the prospective buyer does. This can ultimately be a decisive factor in the sale and be reflected in the price. The advantage of external consulting is precisely this additional perspective—the way a potential buyer views the company. This gives the selling business owner the opportunity to specifically prepare for questions regarding the company’s positioning and strategic business development. Weaknesses can often be addressed, and there is frequently untapped potential. If you know where adjustments can be made, appropriate measures can be implemented before the sale. This could involve, for example, optimizing the company’s processes or revising the product portfolio.
Current State Analysis: Scope and depth depend on the size and complexity of the company
When it comes to defining the scope of the analysis, the motto is: The more detailed, the better. It always depends on the business sector and the company’s structure. After all, it is only on the basis of all necessary facts that priorities can be set and a business plan subsequently drawn up. This, in turn, serves as the foundation for determining the price range—and that is, after all, the intermediate goal before the concrete search for a buyer begins.
During the analysis phase, companies typically provide all necessary and relevant documentation. Key areas include the market and competition, as well as revenue and profitability. Any information that is missing but required must be compiled collaboratively. The result of this labor-intensive analysis is a written report on the company’s current status. Based on this, the sales prospectus is prepared and the sales value is determined. The analysis also serves as a solid foundation for the necessary due diligence process.
Author: Claudia Heinzel is a partner at omegaconsulting GmbH