FAQs – selling a company

Selling a company is certainly not an everyday business decision. It is a complicated and demanding process that requires careful preparation. That is why company owners are not and could not possibly be experts at selling companies.

We, however, do happen to be experts in this field. Selling companies has been our bread and butter for over 20 years and we will be happy to share our expertise with you.

We have prepared a list of FAQs and answers regarding the sale of companies. If you don’t see the answer here to a particular question that you have, contact us and we’ll get back to you right away.

What’s the most common reason for selling a company?

What’s the most common reason for selling a company?

Most commonly, after 15-20 years of work the founders of the company are simply tired. Situations also often involve a death, inheritance, an argument between partners or other factors.

Today, it is also common for younger owners to sell a company if they have reached the goals they have set or are bothered by stereotypical routines. This group of owners generally wants to immediately invest money from the sale into a new entrepreneurial project.

When and at what phase of development is it best to sell a company?

Ideally, you want to sell when all basic economic parameters are growing. If the sales and revenue of a company have been declining for the past few years, investors view this unfavorably, which is reflected in the sale price.

There are, however, exceptions where an investor buys a company because of its employees, assets or unique know-how, and not primarily because of profitability.

How can a consulting company help when selling a company?

Our company typically guides the client through the entire sales process. We take care of everything beginning with consultation before the sale. We eliminate weak areas, arrange for an appraisal, seek out potential buyers, arrange all meetings, inspections, price negotiations, prepare legal documents and take care of payment after the company is handed over.

That way, company owners can fully devote themselves to their business so that it is sold in good condition.

On the other hand, it is sad to watch some business owners try to sell their company on their own for several years. They aren’t able to focus on their business, so the company often ends up in bankruptcy and no longer has any value.

What kinds of companies are in the greatest demand?

The demand for a company is always driven by several possible factors. Each investor looks at a potential acquisition from his or her own perspective – e.g. profit, market share, excess capacity to expand production, employees, know-how, technology, or segment related to their current business, etc.

With respect to sectors, there is currently high demand for operating engineering and toolmaking companies, companies in the medical field, and companies with high value added. But this doesn’t mean that there is no demand for companies in other fields.

In which segment are the greatest number of companies sold?

Our company works primarily in the segment of medium-sized businesses. These companies usually sell for 10-200 million crowns.

How do you get a company ready to sell?

To prepare a company for sale, we provide pre-sale consulting.

If an owner knows, for example, that he will retire in 2017, then the company should be prepared to maximize the sale price within this time frame. Generally, before selling a company it should be running at full capacity.

What determines the price at which an owner can sell a company?

Every company that we sell is first carefully appraised based on many economic and other factors. This appraisal is used to give us a baseline for price negotiations.

What do owners do after they sell their company?

In many cases, owners do not leave the company right away, but stay for an agreed period of time from 6 to 12 months so that they can personally hand over all business matters.

After the sale or the transition, they usually take six months or a year off to relax, travel, etc. But after some time, many of them use their new capital to start another venture (usually in a completely different field). Older owners often just enjoy their family and a well-earned rest.

Can you sell a company that is going bankrupt?

In addition to selling companies, since 1992 we have also handled company liquidations and bankruptcies. Based on this experience, we find the sale of failing companies to be quite rare and very difficult. Offers to buy failing companies are often associated with fraud and other criminal activity.

Would you, on the other hand, like to buy a company? Read the FAQs and answers for buying a company.