Those who found or take over a company usually do not immediately think about selling it. The energy goes first into the development of the business model.

This is also the right approach, because the more successful a company is, the easier it is to sell and the higher the price that the entrepreneur can achieve. Nevertheless, there are some measures that set the course for a successful exit at an early stage.

Set up Your Company for Growth

The most important requirement for a company's success is a future-oriented business model. This applies to the start-up phase as well as to the sale of the company. Fast-growing companies are regularly valued higher than stagnating ones. Clever managing directors therefore continue to develop their range of services and look for new growth markets.

The term ‘business model’ is often confused with ‘business idea’. The business model approach is an effective tool for developing the potential of a business idea and, through systematic work, ultimately laying the foundation for profitable business activity.

A business model is coherent if, on the one hand, it identifies a gap in the market or a genuine customer need and, on the other hand, it creates a fundamental advantage in the market in conjunction with your personal strengths.

When working on a business model, visualisation in the form of the Business Model Canvas is particularly helpful. This now well-known thinking tool summarises all the elements of a business model on a single A4 sheet and also helps to clarify the interdependencies of the core processes.

Once developed, a business model should not be a static affair. However, many large companies have failed to adapt their business model in the past and have been replaced by new, disruptive challengers. The keyword in this context is ‘business model innovation’. It describes the ability of the company to adapt its own business model to changing environmental conditions as the core requirement for remaining competitive in the long term.

Keep a Firm Grip on your Finances

Potential buyers expect to be able to see your financial situation. They calculate the value of the company based on past and forecast figures. If the financial data is incomplete or incorrect, they will lose trust, back out or only be willing to buy the company at a high risk discount.

Regardless of the sale of the company, accurate accounting is an essential basis for effective controlling and thus for strategic management. The current trend of replacing traditional accounting with paper receipts with digital and thus paperless accounting is a challenge for every company at the moment of the changeover, but in the medium term it is a unique opportunity. Suddenly, all information is available at all times, regardless of location. This not only saves paper, but also a lot of time. It also makes it easier to work with external service providers and consultants, since all the relevant information and documents are available at the push of a button, so to speak.

The effects of digital change in finance go far beyond accounting. The digitalised company requires new skills and processes, and the traditional finance department must rise above traditional functions such as accounting, controlling and reporting to provide new insights and forecasts that accelerate decision-making in all departments.

It is particularly important to engage with analytics applications. Even if financial management is initially used to steer the company safely through day-to-day operations, the ultimate goal is to sustainably increase the value of the company from the owners' perspective. The fact that increasing the value of the company should not be at the expense of employees, the quality of customer relationships or the environment is now almost taken for granted under the concept of sustainability.

Hire a Professional Team

Companies that are very closely interwoven with the person of the managing director are difficult to sell. Therefore, start cutting the cord early on. Hire well-trained personnel in every area and at every level and delegate day-to-day business. This gives you more freedom for your actual management tasks. As soon as you start thinking about selling a company, involve important decision-makers in the process. A professional team that can continue business operations independently of the boss and does not leave shortly after the sale has a value-enhancing effect.

Family businesses are not only the oldest form of entrepreneurial organisation, dating back to the Fuggers or Medicis, they have also shaped the development of capitalism and are now justifiably referred to as the ‘heart of the social market economy’. More than nine out of ten companies in our western economic area are family-owned. They represent almost 50% of all taxable sales and employ more than half of all employees subject to social security contributions.

Of all the challenges that a family business has to overcome, corporate succession is the biggest and most important: only just over half of all companies manage the generational change. The reasons for this are manifold. On the one hand, the entrepreneur handing over the business must be prepared to deal with the issue; on the other hand, there are many difficult and sometimes very personal questions to be answered. It is about ownership and leadership, about money, power, love and recognition. Legal and tax issues further increase the complexity of corporate succession.

However, if you address the issue of succession early on, it is more of a creative task than a threat. Development plans for the next generation, dialogue with the whole family and the creation of structures and an advisory board that are independent of individuals not only help to make the transition conflict-free, but also to professionalise the family business.

The joint development of an ownership strategy and a family constitution based on it is an effective instrument for the owners to jointly develop their will. It contributes to the long-term cohesion of the entrepreneurial family and thus ensures the future of the family fortune, even if the generational change for the company should take place outside the actual entrepreneurial family.

Choose Your Investors Carefully

When looking for investors, don't be guided by cost alone. Check how much experience investors have with companies in your industry. A large network, flexibility in the design of financing instruments and a willingness to support are often more valuable than cheap capital.

Finding a suitable successor is one of the most important tasks for company owners, and in many cases it also marks the end of their entrepreneurial career. It is also likely to be one of the most emotional matters in their professional life. After all, they want to hand over the life's work they have built up with much love and sweat into capable hands that will successfully lead the company into the future.

For most entrepreneurs, the main objective of succession is to ensure the long-term success of the company even after the handover. But what type of successor is best suited for one's own business? The choice between internal and external succession often makes it necessary to prioritise the handover objectives: Given the current state of the company, is continuity or innovation more important for long-term business success in the near future?

Of course, in a corporate transaction, financial indicators such as profit are a driving factor behind the acquisition efforts of a potential buyer. However, these indicators are not the only factor influencing and possibly limiting the circle of interested parties. Factors such as location, industry and company size should not be neglected, as they have a significant influence on the number of interested parties and their characteristics.

Sometimes owners have certain knock-out criteria in mind for the successor, the basis for which is not always entirely obvious. However, it is worth being sparing with knock-out criteria when creating the buyer profile and showing a certain openness.

Find a Competent Advisor

As the business owner, you will have to take many preparatory steps for the sale of your company yourself. Nevertheless, it pays to get an experienced advisor on board at an early stage. They know the M&A market and have a broad network of investors and potential buyers. They know when the time is right to sell a company and what price is realistic. Above all, they will help you with professional marketing, drafting the contract and conducting negotiations.

Summary

If sufficient time is available for the preparation phase, the saleability of the company can be increased with targeted measures. In doing so, the entrepreneur should ensure that:

• there is as little dependence on the owner as possible,
• the most important employees remain with the company,
• customer and supplier data is transferable,
• there are no cluster risks due to dependence of the business success on a few customers or suppliers,
• the processes are well documented,
• the business premises are well maintained,
• and a modern IT infrastructure is in place.

These positive value drivers, particularly in combination with a suitable marketing concept, can lead to a higher number of serious succession candidates and a greater willingness to pay. That is why it pays to start succession planning early enough.

In this situation, an experienced transaction consultant can provide significant support. He or she guides the selling party through the various phases of succession planning – from company valuation and buyer search to contract negotiations and company sale. In this way, the consultant takes the pressure off the entrepreneur throughout the entire transaction process, allowing them to concentrate fully on day-to-day business.

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