Preparing a company sale

The shareholders' objectives determine the process

A complete exit leads to different requirements than a partial sale with continued operational involvement. It also makes a difference whether an owner wants to generate private liquidity or provide the company with additional capital for growth. Before going to market, the parties involved should agree on the intended scope of the sale, the time horizon and the key conditions.

Assessing the position also includes the question of whether a sale is already the appropriate solution. Depending on the objectives, a management succession, a minority investment or an adjusted financing structure may also be considered. Personal plans and the future position within the company are therefore part of the preparation.

Presenting the economic situation comprehensibly

A prospective buyer must be able to understand how revenue, earnings and liquidity are generated. For this purpose, historical figures are combined with a reasoned business plan. One-off income or expenses should be explained separately. If services provided by shareholders will be replaced by external staff after a handover, these future costs also belong in the analysis.

Dependencies on individual customers, key persons or suppliers are equally relevant. In an owner-managed company, it should be clarified which relationships can be transferred to the organisation and where the owner appears personally indispensable. A structured review supports both the valuation and the preparation of negotiations.

Organising documents according to their relevance

The starting point includes annual financial statements, current management accounts and a comprehensible business plan. Information on customer structure, organisation and investment requirements is added. Material customer, supplier, financing and licence agreements must be available and complete. Financial, legal and tax matters are examined in the subsequent due diligence process together with the respective specialist advisers.

For the approach to buyers, we recommend releasing information in stages. Initially, an anonymised description of the business model and the transaction is sufficient. After a confidentiality agreement has been signed and the client has given approval, selected parties can receive more detailed information. The data room should reflect the actual information needs of each process phase.

Distinguishing company value from sale proceeds

A valuation provides a reasoned orientation for negotiations. The proceeds that can actually be achieved also depend on what is being sold and how the offer is structured. Debt, cash, the agreed level of working capital and variable purchase price components can influence the economic assessment.

To compare offers, we therefore recommend a combined overview of purchase price, payment dates, conditions and remaining obligations. A fixed amount paid at completion has a different meaning for a seller than a payment that only arises when future targets are met. Any intended participation in future success must deliberately fit the seller's personal planning.

Selecting buyers in a targeted way

Strategic buyers, private equity firms and family offices pursue different objectives. We recommend basing the selection on factors such as the business model, transaction size, development prospects and the intended role of the existing management. International investors can broaden the range of potential partners; their suitability must be assessed for the specific mandate.

Before entering in-depth negotiations, it should also be clarified who makes the decision, which financing is planned and which conditions for a commitment are still outstanding. These questions make it easier to assess offers according to their deliverability.

Preparing the next step thoroughly

As an independent M&A and corporate finance advisory firm, Fox Capital supports owners of mid-sized companies from the strategic assessment through economic preparation to transaction structuring. International investor contacts and financing expertise are aligned with the client's objectives. We coordinate legal and tax matters with the responsible specialist advisers.