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In our consulting practice, we repeatedly find that finding the right investor or buyer for their family business is a fundamental challenge for our clients. The question of who in the market might be interested in an acquisition and, at the same time, would be suited to successfully leading the company into the future is a major concern for many of our clients at the outset of the process.
Strong Interest in German Family-Owned Businesses
First, it is important to note that well-managed German family-owned businesses and SMEs—even those with as little as 5 million EUR in revenue or 750 TEUR in operating profit (before taxes and interest)—attract significant interest from relevant investors across Germany. Strategic investors from the same industry or complementary business sectors, private equity firms, and family offices are the most common groups of interested parties.
Professional Planning and Execution
First, however, it is important to discuss your personal goals—such as your short-, medium-, or long-term exit from day-to-day operations—as well as the goals for your company and your employees with an experienced M&A advisor. Likewise, the requirements for a potential investor and the individuals acting on the buyer’s side should be clearly defined. Through a professionally structured and managed process, a specialized and experienced advisory firm should be able to identify 5–10 particularly suitable investors or prospective buyers through its network and get to know them through personal discussions with you. As the process unfolds, the group of interested parties can be further narrowed down to the most suitable candidates at this early stage based on insights from these discussions regarding strategic fit, personal fit among the key individuals involved, and indicative offers.
Defining your objectives early on and selecting candidates accordingly ensures that you invest your valuable time wisely and purposefully, and that the various objectives can actually be achieved in the interest of an ideal external business succession. Selecting several particularly suitable and interested candidates ensures that the planned sale of the business can be completed within the intended timeframe.
Ensuring Discretion
Achieving the desired succession solution within a period of 12–15 months also serves, in particular, to maintain the discretion of the transaction and avoid uncertainty among employees, customers, and suppliers.
The 6 steps for a successful sale of your business are therefore:
1. Select an experienced M&A advisory firm 2–3 years before the planned sale.
2. Define the objectives of your external business succession in all aspects.
3. Prepare the marketing process, including a business valuation and an information memorandum.
4. A professional and structured transaction process focused on particularly suitable prospective buyers.
5. Selecting the candidate best suited for you and closing the transaction.
6. Commencement of the agreed-upon short-, medium-, or long-term transition phase.
