The sale of a company is an important moment for an entrepreneur. On this occasion, it is necessary to address a range of subjects ranging from payment terms to the professional project of the buyer. In 2023, around 51,000 business transfers were recorded in France, which represents 27% of the 185,000 businesses potentially transferable each year. For 2024, a 10% increase in transfers will reach 55,000 transactions. In the next 10 years, according to the information website of the Ministry of the Economy, more than 600,000 businesses will be transferred to buyers. For each transaction, several central points must be taken into account. A competitor wants to buy me… How to best prepare and negotiate the buyout of your business?
Before selling your business, understand its strengths and weaknesses in order to establish a diagnosis. This is at the heart of the success of any takeover. This diagnosis takes into account a set of criteria and factors: products, the market, competition, company strategy, human resources, accounting, resources, legal and financial aspects, etc. and requires careful preparation which requires developing know-how.
Prepare the company for takeover
The transfer of a business is a complex subject, so much so that it is now estimated that around a third of transactions end up failing. For a takeover to take place, technical skills and a common psychological approach are required from both parties. To encourage the buyout, the entrepreneur must organize his company so that it can be sold as quickly as possible, that is to say by eliminating the “capital losses” of the company. In any case, this is a long and delicate process. The buyout phase requires patience, and it is good to have previously followed training in different negotiation techniques. Establish clear objectives from the start, which will be used to define the specifications for the business transfer.
Address all the elements
A buyout negotiation covers a large number of subjects. The first is the financial aspect. Establishing a price range is the prerequisite for any negotiation. It is estimated that the difference between seller and buyer should not be greater than 20% to expect an agreement. During discussions, it is important for the entrepreneur selling his company to disclose sensitive information sparingly. You will have the potential buyer sign a confidentiality letter when you provide data on the company’s core activity. This is a way to protect the company, ensuring that this information will not be passed on to a third party.
Protection constitutes a major issue during the negotiations. Guarantee clauses will be signed between the two parties to determine the reality of the company’s liabilities and assets. Before reaching an agreement, the terms of recovery and payment will also be defined.
Call on outside help
During the buyout of his company, the business manager will be able to consult his relatives, his colleagues and his advisors in order to minimize the emotional impact of the sale and to concentrate on its financial aspect. It may be relevant to get in touch with external partners who will provide assistance during the buyout. These could be specialists from a consulting firm, lawyers and accountants? These will allow you to have more perspective as well as a global vision of the situation. Intermediary firms are necessary for all major transactions, above 7 million euros. Below this amount, good accountants are sufficient to manage the technical elements of the file. In the event of a blockage in the negotiations, the entrepreneur can intervene in person to restart the process. In general, it is estimated that about a year passes between the first contacts and the actual resale of the company.
Selling to a competitor is often an opportunity which allows you to develop other projects thanks to the experience acquired.
To know! The term “intermediary” covers players in the business transfer and takeover market whose aim is to put sellers and buyers in contact in the broad sense, that is to say with or without advisory services, free of charge or not. They are classified into 3 families: support and support networks, intermediation firms, professionals who intervene occasionally.
