However, an experienced acquisition advisor knows that success is determined by preparation.
The most important part of the sale is to determine the range within which the company’s value lies. Once this bandwidth has been determined, it is up to an experienced advisor to reach as high as possible in this bandwidth. He does this by securing many potential buyers and by negotiating well. So at this stage, experience as a dealer is crucial.
But in the end, it’s all about the bandwidth itself. It often sets the limit. Getting a higher price than the upper end of the bandwidth does not happen often. And this bandwidth is very much dependent on proper preparation. Good preparation provides good bandwidth and therefore a good price. Timing is crucial in this preparation.
A good counselor would like to spend a lot of time on this preparation because he knows it will pay off.
What is a good timing now?
When deciding the right timing, you look at three things:
- Presentation of company figures
- The moment to put it up for sale this year
- Are there enough buyer candidates
1. The figures:
It is essential that the figures presented to the company do not raise unnecessary questions. Buyers are mainly looking for ambiguities and irregularities in the numbers. The rule is: the more questions, the lower the price.
So make sure you have numbers that meet the following conditions:
- Presents a number of stable years. Preferably a slightly growing turnover, but above all a stable gross and net profit.
- Clean up the numbers by eliminating irrelevant costs and normalizing the administration fee
- Remove things you do not want to sell (real estate?) From the numbers
- Clearance of mutual debt between Holding, operating company and shareholders
- Secure normal working capital with the operating company. Assume a current and fast relationship that is normal in the industry
- Take a good look at the company’s stock level (value of obsolete shares on time)
This means that a successful sale requires many years of preparation. It is important to manage these figures by striving for stabilization in time and not risky growth.
As an entrepreneur, you quickly think that you will lose revenue, but that loss is more than advisable with a higher selling price.
2. Current time:
Selling a business goes better when the economy is just recovering from a crisis. So actually now, right after the corona crises. Buyers have been waiting a while to see how the economy would fare, and now that it’s coming back up, they’re going for a buyout.
As an entrepreneur, you do not have much influence on the occurrence of such a crisis, but you can consider the following:
- Does your company have a seasonal pattern? Then the time of year is important
- Companies sell better at the beginning of the year and right after the summer
- Retail businesses sell best in the spring
- Companies sell well when there are multiple acquisitions in the industry. Especially when market leaders are taken over and that publicity is gained, it is a good time to also offer your business for sale.
It is important that you choose a short campaign where you reach out to all potential buyers at the same time. You do this by:
- Have a list of potential buyers ready
- Publish a profile on multiple platforms for selling businesses at the same time
- Actively engage in specific leads
This will result in a “noise” that will lead to many potential buyers.
Here’s the rule: the more buyers, the higher the price.
Get enough potential buyers:
As I said: the more souls, the more joy.
- Always have a list of potential takeover candidates
- It is important that the companies on this list (often your main competitors) actively follow you in the years before the sale
- So contact them actively by, for example, linking to them or meeting them “by accident” at trade fairs
- A well-maintained network in your industry pays off here. Today, this is possible through a medium like Linkedin or another social platform.
Good preparation therefore results in:
- A list of potential candidates
- who have been following you for years
- For whom you have business information without questions
- And who receives this information at the same time
And these are the prerequisites for a successful sale. It is no longer just about good negotiation, but much more about playing a well-won game.
Bernd Mintjes studied economics and psychology at the University of Groningen. Over the past 25 years, he has invested in more than 200 companies. Bernd is involved as a partner in OvernameAdvies.nl. With his experience, he is the ideal advisor for entrepreneurs.
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