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Top 5 questions for entrepreneurs who want to sell their company

1. How much is my company worth?

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.

A professional advisor will know which of the various valuation methods is right for your business. He also will be able to get the highest possible price for its value.

Read more about: How to get the best price for my company.

4. How much does it cost me to sell my 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?

5. Who can I trust 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

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