Business purchase, sale, and reorganisation

1. Decision to sell the company

If there is only one owner, then this is a simple step, but if there are several owners, then consensus is important because selling a part of the business is more time-consuming and financially less beneficial than selling the whole business.

2. Valuation of the company

Company owners already have an idea of how much money they would like to receive; however, we recommend a professional appraisal because it will not only be based on the owner’s ideas about the company’s situation and opportunities, but will also be evaluated from the point of view of a potential buyer who sees the situation from their side. In the course of the evaluation, recommendations can also be made on what the company should fix before the sale and what the possible risks could be in sales negotiations.

3. Approaching potential buyers

This stage can often be the beginning of the whole process, as once realising that the company could be interesting to someone, we can decide to sell and begin to understand its value. After the value of the company and the possible direction of the deal are clear, potential buyers are approached. The type of communication, information to be provided in the invitation and other aspects are individual for each deal. It may be the main information about the company prepared on an A4 page, or a presentation saturated with images and arguments. All of this is decided depending on the individual circumstances of the process.

4. Response or feedback from potential buyer

After addressing potential buyers, a response is received regarding their interest in participating in further negotiations. A company can have one potential buyer, but there can also be several buyers, which allows you to wait for upward price dynamics, just like in an auction.

5. Provision of information

Buyers who have expressed an interest in purchasing the company are invited to sign a confidentiality agreement, after which they gain access to the business information of the company being sold. It is very important to provide as much information as possible so that buyers can objectively evaluate the company.

6. Company acquisition offer

After receiving and analysing the information, the potential buyer already makes a specific financial offer with the price they would be willing to pay for the company, and what this calculation is based on. This is undeniably the most anticipated moment of the entire process.

7. Sales negotiations

The price offered by the buyer and the price expected by the seller rarely match, so a compromise is sought during negotiations. The arguments of each side are considered, and the parties try to agree on a price at which the transaction could take place.

8. Due diligence 

The price offered by the buyer and the price expected by the seller rarely match, so a compromise is sought during negotiations. The arguments of each side are considered, and the parties try to agree on a price at which the transaction could take place.

9. Conclusion of the contract 

After the sales negotiations and research, the essential terms of the company’s purchase contract are discussed, and the preparation of the contract begins.

This is a relatively classic scheme of how sales negotiations proceed and how a company is sold. In terms of time, it can take from several weeks to several months. It depends on the size of the company, the structure of assets, various encumbrances, etc. The sales process for a small service company will definitely be significantly faster than for a large manufacturing company.

We live in an age of information and the buyer and the seller often know each other, so it is possible to skip several aspects; however, we strongly recommend fulfilling point 2 and to be aware of how the value of the company is formed as well as how it is seen by both the owner and the buyer.