There are things that we often only do once in our lifetime, and perhaps wanting to sell your company is one of them, so when an entrepreneur considers selling their company, they have a lot of doubts. Even as many as when they founded it. At ONEtoONE, after more than 18 years advising on the sale and purchase of companies, and with thousands of sales orders, we have compiled the 5 most common questions that our clients have asked us when selling their company.
We all want to minimise mistakes when making important decisions in our lives. How much will it cost me to sell my company? Is this the right time? Who can I rely on to help me earn as much as possible? And, above all, is it the right time to sell? Yes, now more than ever, it is. We clear up your doubts so that you don’t miss this opportunity.
Short answer: whatever a buyer wants to pay. Long answer: it depends on how you balance the concepts of value and price and which buyers you can reach.
Strictly speaking, the price of a company is the amount for which two independent parties agree to carry out a purchase and sale transaction, and this amount is fixed during the negotiation process. This happens after an analysis of the company’s figures and the market. To do this, you need to know how to access this information and weigh it up.
To get the best price possible, you need to know what the value of the company is, which is a subtle concept.
In order to clarify the balance between the value of your company and the price you can obtain, a professional valuation is an essential first step.
The right buyer will understand what your company is worth and will pay what it deserves. In general, foreign companies trying to enter new geographic markets are willing to pay more. However, contacting such buyers can only be achieved with an international network.
Read more about: How to get the best price for my company.
The time you choose to sell will make a huge difference to the price you can get. Is it the right time to sell my business?
Matching personal, business and economic factors at the right time is the key to knowing when to make the best decision. The time you choose will also influence the time it takes to successfully complete the sale.
You need to know how to spot a window of opportunity. At the moment, there is still a lot of liquidity. Large financial and international groups are looking for growth through acquisitions.
But keep in mind that windows of opportunity also close. It may be a long time before another one opens. All indicators seem to point to a future recession. Those who do not sell now may not be able to sell at current prices for years to come.
If you believe that your personal motives and your company’s current momentum are aligned to maximise the value of your company, the time is now.
Read more about: When is the best time to sell my company?
You are undoubtedly a specialist in your business and your industry, but entrepreneurs usually only sell their businesses once in a lifetime. If you know how to manage your business, an advisor knows how to sell it in the best way.
Buying and selling a business is a science in itself. You have to know the timing, the process, the prices, the state of the market and mastering negotiation. Also, you need to know how to handle the paperwork and documentation. In addition, you have to know how to find the buyer who can pay the most.
You are probably not familiar with the stages of a sales transaction or the most common concepts. Once you have decided to sell your company, a process begins that will be led by your advisor, who will guide you through the initial phase of documentation and valuation of your company, the search for the ideal buyer, the due diligence process and finally the negotiation of the sale and purchase agreement.
Your job during the sale, which may take a long time, is to focus on your company in order to strengthen its value. Maintaining its profitability will determine the price and the closing of the transaction.
Read more about: How to sell a company
This is one of the first questions entrepreneurs who think of selling their company ask themselves. It does not have a simple answer as it “depends” on many factors, among others, on the advisors that come into play.
It should be clear to you that for a once-in-a-lifetime transaction in which you have no experience, it is more advantageous to rely on professionals. Having at least one M&A advisor, a lawyer, and a tax advisor are the professionals we recommend.
As for the first one, advisors in the sale and purchase of companies usually work with a fixed fee and a success fee. This advisor is of vital importance because he will ‘create’ the operation. Their fees are usually a percentage that will depend on the size of the transaction; the higher the transaction value, the higher the fees, so the alignment with the client’s interests is maximum. Success rates can range from 1% for large transactions to 6% for small transactions.
As for lawyers and tax advisors, they usually enter the transaction when there is already a first agreement between buyer and seller. Their fees are usually fixed for the amount of time they will need to spend to underpin the transaction. Again, depending on the complexity of the transaction, their fees can vary in a very wide range, nowadays, between 25,000 and 100,000 euros.
If you have ever heard the saying “being cheap can be an expensive mistake”, you will find no better application for it than in the case of the sale of a company. You may save some money if you don’t hire these professionals, but the benefits you get from their services will more than cover this expense.
Read more about: How much does it cost to sell my company?
You have dedicated your whole life to your company. You have built up your wealth with it. When it comes to selling it, you are not going to put it in the hands of someone who does not understand its importance and what it means to manage your wealth.
You wouldn’t go to a family doctor if you needed a cardiologist, even if the cardiologist charged more or lived further away. Just as you would not put your health in the hands of a non-specialist doctor, you would not put your wealth in the hands of someone who does not know how to move it without making a loss.
Selling a company is a technical and financial job with a lot of research and strategy behind it. When dealing with such matters, we need to be able to trust the person in front of us. Make sure you trust for the right reasons. Sure, you can trust the family lawyer or a lifelong friend, but not place on them the enormous responsibility of carrying out a complex transaction that they have never done before.
It is worth spending some time looking for and finding someone you can trust to sell for the right reasons. And in this type of transaction, ask yourself, what arguments justify your trust? You can certainly rely on an advisor who:
- Has proven and successful experience in selling a business.
- Understands your family, financial and personal.
- Has your best interests at heart.
- Has access to buyers who can pay more and better.
- It is legally and contractually bound to handle the transaction with confidentiality.
- Treats you humanely and honestly.
The reality is simple: to sell your business, you need the help of a professional who specialises in business sales.
The value provided by specialist business sale and purchase advisors will be reflected in the price you get. To do this, they will help you get your business properly prepared, locate the highest paying buyer wherever they may be and help you manage the paperwork in the right way, as well as preventing any mistakes you might make.
Read more about: The role of the advisor in the sale of a business
ONEtoONE Corporate Finance is a global advisory firm specialising in the sale and purchase of companies in all sectors. Our successful experience with more than 1,700 mandates supports us in advising on any issue related to the details of transaction closings.
If you are interested in considering the sale of your business and need professional advice, please do not hesitate to contact us. The window of opportunity is open – we’ll help you get through it!