The First Step: Assessing the Current Situation
Real-world examples consistently show that forward-looking, long-term sales planning significantly improves the chances of achieving a fair selling price. Experts consider approximately five years to be a realistic timeframe for taking all necessary steps and successfully completing the transaction.
First, business owners should clarify the reason for the sale. Is it to prepare for retirement? Is the goal to facilitate a generational transition within the family? Are financial interests the primary consideration? The strategic approach to selling the business varies depending on the initial situation.
The Second Step: A Transparent and Comprehensive Valuation
Small and medium-sized enterprises are characterized by features that conventional valuation methods often fail to capture adequately. However, a well-founded business valuation is the foundation for a successful transaction and a market-based selling price.
In addition to traditional financial metrics, non-monetary factors are therefore becoming increasingly important. To date, however, there are only a few suitable methods for comprehensively reflecting the economic reality of these companies.
miso consulting GmbH, based in Baierbrunn south of Munich, specializes in transaction advisory services for small and medium-sized enterprises and has developed a solution to this problem with the aumento value system®. When valuing a company using the aumento value system®, the so-called “soft facts” of the business—such as sustainability criteria, future market opportunities, or customer satisfaction—are also taken into account and measured.
Milestones on the Path to a Successful Business Sale
• Clarify the initial situation and determine the reason for the sale
• Conduct a transparent and comprehensive business valuation by experts
• Define value-enhancement potential and implement measures
• Determine the purchase price for the time of the transaction
• Search for a suitable buyer
• Facilitate meetings between the buyer and seller with the assistance of experts
• Letter of Intent: Both parties’ intent to proceed with the transaction is documented
• Due Diligence: Review and analysis of the company by the buyer
• Drafting the purchase agreement with the assistance of attorneys
• Transaction and transfer of the company
Step Three: Value Enhancement and Purchase Price Calculation
As part of the company valuation, areas that offer opportunities for value enhancement are identified. This allows business owners to specifically prepare their company for the upcoming transaction and increase the chances of a successful sale. The potential purchase price also depends significantly on the potential for value enhancement.
But how is the purchase price actually determined? Financial metrics reflect how the company has performed in the past. However, experts believe that these metrics do not fully capture the company’s value. The aumento value system® is therefore designed to take all relevant value drivers into account.
To this end, business owners complete a comprehensive analysis questionnaire for the valuation. Monetary and non-monetary factors are then quantified and calculated, resulting in a realistic and market-based price that serves as the foundation for transaction negotiations.
Step Four: Find Prospective Buyers and Complete the Transaction
Once the company is well-positioned and transparently valued, it can begin the search for a suitable buyer or engage experienced advisors who already have a pool of prospective buyers.
In this phase, too, clearly defined soft factors contribute significantly to success. Studies show that cultural barriers, in particular, can cause a transaction to fail. In practice, it has generally been shown that the better a company is prepared and the more comprehensive and transparent the valuation, the higher the chances of a successful and sustainable transaction at a market-based price.
