You should exercise increased caution if you receive unsolicited sales calls, emails, or letters drawing your attention to a large number of prospective buyers who are allegedly seriously interested in purchasing your company. In most cases, this is followed by a visit from a sales representative trained in psychology. This representative will again point to the many alleged inquiries from potential buyers. During this conversation, the sales representative will ask for your financial statements, creditworthiness, and asking price. After a superficial evaluation, he or she will “determine” a purchase price that is often far above your expectations.
High monthly costs and long-term contracts are red flags
As early as the initial consultation, the commission-based sales representative will pressure you to sign a management contract with a term of between 6 and 24 months. The resulting costs quickly add up to several thousand euros per month or tens of thousands of euros per year. Concrete, measurable results are usually lacking.
Some unscrupulous market players even present profiles of potential buyers to business owners ready to sell, arrange meetings, and then cancel them just a few days before the scheduled date, claiming that the prospective buyer has changed their mind.
How can you verify a consultant’s credibility?
1. Initial and follow-up contacts without sales pressure: A reputable consultant always uses the initial contact to analyze the individual situation and present the available consulting and support options. The sole focus is on the business owner’s individual succession situation. Reputable consultants then present a detailed proposal tailored to the specific situation and do not pressure the client to sign a contract. Trust takes time.
2. No long-term contractual commitments and no recurring flat-rate fees: Reputable consultants do not earn their money through long contract terms and high monthly flat rates. A clearly defined proposal makes it clear what services an entrepreneur looking to sell is paying for. These typically include a business valuation in accordance with the standards of the Institute of German Auditors (IDW-S1), a comprehensive business profile, and support for the entrepreneur during negotiations. Reputable consultants also operate largely on a success-based fee structure and offset a significant portion of the upfront costs against the success fee.
3. BDU Membership: Many reputable succession planning consultants are members of the Federal Association of German Management Consultants (BDU) and commit to adhering to the strict standards of proper succession planning in their daily work. Consultants of integrity—including K.E.R.N—The Succession Specialists—have in some cases set even higher standards for themselves. This applies to key areas such as the protection of personal data for both sellers and buyers.
4. References: Ask for references and verify them by calling the references directly. Neutral evaluation tools, such as ProvenExperts, or a prestigious award, such as the WirtschaftsWoche Consulting Award, can help you make your selection. It is also helpful to inquire with regional Chambers of Industry and Commerce (IHKs) or Chambers of Crafts (HWKs) about their experiences with consultants in the area. Dubious providers often create a large number of positive references on websites whose other content usually has nothing to do with business succession.
