▷ Sale of business: from decision to signing with the buyer, a long journey 2020 -

The sale of your business is a decision that begins on a journey, sometimes very long. Before the final signature of the transfer of the company’s shares or the business to a buyer, it usually takes several months or even years. Even if the number of buyers greatly exceeds that of the businesses sold, it is in your interest to take the time to find the right candidate for your succession….

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Training & Co'm

Establish a diagnosis of your business

To successfully sell your business, the first step is to take stock of your situation. All the elements relating to its activity are to be taken into account.

These are internal characteristics, specific to the company. For example, in the case of an industrial SME, the equipment, the quality of the workforce, current contracts, buildings, stocks, etc. must be identified. In terms of accounting (turnover, results) and finance, you must also be up to date and be able to present several accounting years.

You must also be able to provide all documents, supporting documents, contracts, etc. For all this information, the assistance of your accountant and / or legal counsel is essential. They can help you avoid forgetting things that are part of their daily lives.

You also need to take stock of the market in which your company works. Know the competition, the evolution of the market, the regulations in force and those that are being prepared. All the intangible elements can weigh heavily in the calculation of the valuation of your business.

Define the value of your business?

As mentioned above, the value of a company takes into account the tangible and intangible elements.

Machines, buildings, stocks, equipment (vehicle for example) are elements which must be established then valued. It may also be more interesting to sell certain equipment separately from the company. The buyer of your business may have an interest in investing in new equipment.

For intangible items, calculate the value of patents, brands, customer files and other internal databases. The know-how of the employees is also a wealth that you must highlight in the negotiations that you will conduct with the buyers who will study the assets of your company. The valuation of the whole company must be consistent.

As long as you have not yet formalized the plan to sell your business, the difficulty is to keep it confidential. You can rely on outside opinions, but remind them that the company is not yet on the market. Moreover, it may never appear on the open market for business takeovers. It all depends on the nature of the buyer with whom you are going to do business.

Find the right buyer for your business

Once you’ve defined a valuation, the next step is to find a buyer, which can be easier in two specific cases.

The transfer of the business to a family member or a close relative does not require that your transfer plan be made known. Likewise, if one of the employees applies to take over the business, taking over your company will be easier. In both cases, the people involved know the business from the inside. If they have worked there, the transition will be more flexible for employees if there is one. For customer and supplier business relationships, this type of buyer is generally simpler.

Apart from these people close to or present in the company, the buyers will not be missing. In fact, it is estimated that only 30% of the businesses sold each year are advertised. The rest are sold by word of mouth, without any publicity or advertisement. For example, the transfer of shares in a limited liability company SARL or a simplified joint stock company SAS does not require the publication of a legal advertisement in a journal of legal advertisements. Only the registry of the commercial court is informed since it registers the act validating the transfer of the shares, since it is about a modification of the statutes of the company.

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