How to sell a target business

Goals and planning

Obviously, the goal of every deal can be different. However, for simplicity, we classify all of them into personal or tax-related goals. Reaching a personal goal means having enough free capital to then focus on earning expected profits; fulfilling tax-related goals involves making sure that the deal is going according to the schedule.

When it comes to planning, it always takes some time to prepare a business before it can enter the market. In the EU the process of preparing a business and performing a sales deal especially in the case of an auction lasts about 12 months or even more. Half of that time is usually dedicated to the actual sale stages such as negotiating with a buyer and closing a sales deal.

Principles of selling

As a matter of fact, the process of selling a business in the EU is complex, time and effort-consuming both for directors and stakeholders. Therefore, it is crucial to stick to the planned schedule for selling and to ensure cooperation among stakeholders. These principles should help minimize risks.

Potential buyers

Traditionally, we can differentiate two kinds of buyers:

  • Industry buyers – strategic buyers who look for expanding their own existing business by purchasing capital assets;
  • Financial buyers – for example PEFs; look for companies that are supposed to generate a certain amount of profit in a fixed time period.

Core assets

Generally, it is a good idea to monitor the prices and deals in a given company’s industry. It is important to realize what is the most valuable assets: most probably it is senior management, personnel, IP and customer database. Yet it depends on a buyer specifically how they will value such core assets. While financial buyers usually view senior management as more valuable, industrial buyers usually already have a team of senior managers completed.

Corporate structure

Prior to conduction an M&A deal in the EU, it is necessary to ensure that the company’s corporate structure is suitable for that. Thus, make sure to analyze your corporate culture and create a list of its stronger and wicker sides. Remember to analyze these aspects of conducting business in the EU as well as discuss them with potential buyers:

  • Taxes;
  • 3rd party consent;
  • Applicable regulations;
  • Shareholder approval thresholds.

Consultants

The process of selling a target company commonly happens to be truly complex and requires the assistance of specialists. A professional lawyer can lead you through the deal while following all necessary legal requirements of the EU. Moreover, they would advise what type of deal is suitable specifically for your company. As for dealing with taxes and similar financial aspects, an experienced accountant should be hired, too.

You do not have to look any further to find professional consultants to sell your business in the EU. COREDO is here for you; you only need to contact us and arrange a meeting. Our specialists will help you at every stage of the deal.