Do you want to sell your company or part of its shares and are looking for consulting for this M&A transaction?
Then you have come to the right place. For getting the best result for you, the company might be prepared and optimised and then valued. To achieve optimal results in your negotiations, the business and its environment will be simulated on thousands of possible paths and afterwards the company will be valued using various methods.
Call NowA company sale is a process where a company is transferred as a share deal or an asset deal from the former owner (seller) to the new owner (buyer). Through business valuation, the company value can be calculated, which is vital for the transaction.
Consulting for the sale of a company especially includes an environmental and a business analysis, a business valuation, and support during the M&A transaction sale. Essential during the sale of a company is that in many cases an adequate successor has to be found, and the seller might be interested in a price paid as an annuity (natural person).
The company value, in the case of a company sale, can be calculated by a model provided by the approach of functional business valuation and is called decision value, which represents the minimum acceptable sale price. Next to this approach, for reasons of argumentation, also other methods can be used for calculating the company value (e.g., capitalised earnings method and DCF method).
Reasons for selling a company might be age, reluctance, reorientation, change of the family situation, inheritance, forced sale, compensation, or even expropriation. If the decision is taken freely, one speaks about a non-dominated conflict situation; otherwise, the conflict situation is dominated (forced).
Before selling the company, it's important that the objectives are substantiated and reviewed. In the case of company succession, it's especially important how the price is structured. More details will be given later under "Pricing and Financial Security".
However, in some cases, it can turn out that the company should better not be sold, but the objectives can be reached better with another solution. In a challenging market situation, business consulting might be helpful. Another alternative could be a merger with a competitor. In cases of reluctance or inheritance, a third-party manager can be employed. Subsequently, it is assumed that the company should be sold.
Before offering a company for sale, it's wise to go through the various steps of a business consulting (environmental and business analysis, strategy development & implementation). If one has, for example, three to five years, neglected potentials might be exploited, and the company can be sold at a higher price. Also, personally relevant items such as vehicles and properties can be transferred into the private assets. Generally speaking, the corporate strategy will be aligned towards the sale.
For the M&A transaction (sales process) itself, pricing is an essential factor. As also described in other places, the business and its environment are simulated in a variety of ways. On the seller's side, the information base is usually better than on the buyer's side. In addition to the usual financial data, there is a lot of experience gained over the years. This makes it possible to better assess future developments. Nevertheless, it is important that clean analyses and forecasts are created (Due Diligence). Based on these, the company can be valued.
The decision value, the minimum acceptable sale price, is determined in a company sale using the functional business valuation, while argumentation values are calculated using many different business valuation methods. These include the DCF method, the capitalised earnings method, multiples, substance value method, mean value method, and many other methods. In some cases of a company sale, an arbitration value (umpire value) can also be calculated to fairly distribute the benefits of the transaction among the parties.
The conflict situation can also be multidimensional. This means, for example, that the takeover of employees and the transfer of properties into private assets are up for discussion.
Besides the pure simulation of the company, adapting the valuation model to the seller is of great importance. In addition to withdrawal preferences, other cash flows and the tax effect are significant. The valuation is carried out as a simulation. The result is a decision value as a possible bandwidth with a probability distribution. This allows a realistic assessment of the value of your company.
The pricing when selling a company can be done as follows:
Especially with annuity payments linked to lifetime, there can be different constellations. Mentioned are, for example:
Other combinations can also be chosen, which, for example, include the provision for the spouse. (For completeness, it should also be mentioned that there are so-called other long-term obligations or other recurring payments.) In addition to an annuity, the sale price can also include a one-time payment.
Here I can work with you to develop the appropriate payment structure. For example, it may be important for a client that they sell their company and invest the money directly into another company.
Another person has found the suitable (capable) successor, but he cannot pay the amount all at once and wants to take out part as a loan from a bank and pay the rest in instalments.
Another client wants to sell his life's work and is interested in a monthly or annual annuity. Ideally, this is adjusted for inflation and provides for his spouse because he did not pay enough into the pension insurance during his working life.
Each of these combinations has massive repercussions on the total sale price. The tax effect also differs considerably depending on how the sale price is structured. More on this in the next section.
Some remarks on the subject of law and taxation follow. I have in-depth knowledge in the area of tax planning or tax modelling in German tax law. Nevertheless, I do not provide tax advice since I am not a tax advisor.
A company sale, i.e., in an M&A transaction, involves various advisors. It is like in a hospital, where every doctor has their specialty. The focus of my work is on the holistic view or coordination of the transaction and on the business valuation. For legal and tax questions, it makes sense to rely on the advisors the company has worked with in the past. They know the (tax) legal history of your company best. Especially in an international context, (tax) legal issues can quickly become confusing, and unnecessary mistakes can occur. This is avoidable.
The focus of my work is on business valuation and your support during the M&A transaction. Nevertheless, the distinction between a share deal, i.e., a universal succession, and an asset deal, i.e., a singular succession, may be interesting for you. In a share deal, the entire company, including the legal entity, is transferred; in an asset deal, the company is liquidated, and the assets are individually transferred to a newly founded company.
The last step in the process of selling a company is the negotiation and the actual sale. Often, selling the company is also an emotional matter. Even if one is aware of this, the influence remains at least partially. Here I am happy to be at your disposal as a consultant also during the negotiations. It is very important that you do not deviate from the previously established negotiation positions during the negotiations and do not make concessions too quickly.
Rely on the results worked out. Use the different scenarios and company value calculations according to different methods to argue. Incorporate new negotiation aspects into the valuation model and discuss the advantages and disadvantages with me again. In some cases, it is better to wait for another buyer than to sell your life's work below value.
After the successful conclusion of the negotiations, it is important that a lawyer and a tax advisor check the results again to prevent legal and tax risks and to complete the sales process. My focus is on optimal value determination for price negotiations and your support during the company sale. For the aspects just mentioned, other specialists are relevant. This applies especially to cross-border transactions.