Company Sale Step by Step

Introduction

Once you have made the decision to sell your company, you will need specific knowledge about the process involved. After all, your business is a valuable asset, and special rules apply to its sale. Therefore, thorough preparation is essential for a transparent sale with full transfer of obligations. This includes gathering all necessary information in advance so that you are not pressured by time during the various phases and can make decisions quickly. Even if you are supported by an experienced M&A advisor throughout the transaction process, solid preparation remains crucial.

In this article, we will introduce you to the individual steps involved in selling a company. We will explain key technical terms such as Due Diligence and bidding procedures that are important for you as a seller, and outline the most common reasons why entrepreneurs sell their businesses. This will provide you with a comprehensive overview of the various aspects of this complex undertaking. We divide the sales process into sequential phases that are typical for every company sale. By the end, you will be familiar with the main tasks and understand which factors play a significant role in sales.

The Company Sale: How the Process Unfolds in Four Steps

If you are considering selling your company, it is advisable to prepare thoroughly. The sales process for a medium-sized business typically consists of four main phases:

1. Preparation Phase:

In this phase, you prepare your company for sale. This may involve organizing your finances, optimizing your business, and compiling all relevant documents.

2. Marketing Phase:

This phase focuses on finding potential buyers for your company and presenting them with the benefits of purchasing it. On viaductus, you can create an attractive listing for your company sale.

3. Negotiation Phase:

Once you have identified potential buyers, you negotiate the sale price and contract terms with them. The goal is to reach an agreement that is acceptable to both parties.

4. Contract Phase:

When you reach an agreement with a buyer, the sale is legally formalized. Contracts are signed and the transaction is completed.

Depending on your specific situation and that of your company, these phases may vary. However, we offer you a brief overview of each phase to help you understand the process.

1. The Preparation Phase of the Company Sale

What Are Your Goals for Selling Your Company?

Whether you are seeking new entrepreneurial challenges or preparing for retirement, there are many reasons why you might want to sell your company. However, it is crucial that you, as the seller, have clear objectives. For example, to ensure the future of your brand or to secure a desired position within the company. The goals you set will also determine the sales strategy from the outset.

Internal Preparation of the Sales Process

At the start, it is advisable to conduct a SWOT analysis for your organization. What are the strengths and weaknesses of your company, and what opportunities and risks does the business environment present? You should generally examine the following factors:

• The number and quality of your customers.
• The skills and number of your employees.
• Your company’s position compared to others (benchmarking).
• Your supplier relationships.
• Market trends and industry outlook for your niche in the coming years.

By answering these questions, you gain a better understanding of your company’s strengths and weaknesses in relation to the sales process. This enables you to take value-enhancing measures even before marketing begins. With the Valuation Tool from viaductus, you can conduct an indicative valuation of your company’s worth.

An external perspective can also be helpful to highlight unique selling points and formulate attractive investment reasons. Analyze your company’s financial situation based on the annual financial statements from the last three fiscal years. These analyses form the basis for a comprehensive business plan, which later serves as a decision-making aid for potential buyers.

You can enlist external advisors to assist you in this process. They use various valuation methods to produce a detailed company valuation that can serve as the basis for the asking price.

2. The Marketing Phase in the Sales Process

Generate Interest with an Appealing Executive Summary

The anonymous executive summary, also known as a Teaser, is designed to spark initial interest among potential buyers. An external advisor can assist you with this, but you can also take control yourself with viaductus. The sales listing on our company marketplace viaductus showcases your business at its best. Our AI-powered listing creator helps you quickly create an attractive, anonymous listing. This allows you to attract the right buyers for your company.

Find the Right Buyer for Your Company

With the help of an M&A advisor, you can approach selected companies that may have strategic interest in your business. Unfortunately, there is often a high degree of information asymmetry about who is actively looking to acquire businesses and in which sectors. On viaductus, you will encounter buyers with serious purchase intentions who can initiate first contact with you thanks to your sales listing. Likewise, you can contact potential buyers using the matching algorithm on our platform. Buyers with active purchase listings will be suggested to you if the criteria of the company and the inquiry match.

Exchange Initial Questions and Answers

During the initial contact, buyers and sellers can exchange open questions and answers. Thanks to our messenger system on viaductus, this happens completely anonymously. This allows you to get to know the potential buyer of your company and establish a foundation for the further process.

3. The Negotiation Phase in the Company Sale

Enter into a Confidentiality Agreement with the Buyer

Depending on how sensitive your company data is, it is advisable to conclude a confidentiality agreement (NDA - Non-Disclosure Agreement) with the interested buyer. An M&A advisor or attorney can assist you with this.

Conduct a Management Presentation

The next step is for the seller and potential buyer to meet in person. During the management presentation, potential buyers are provided with all necessary information to assess the company’s situation. At the same time, the personal meeting offers the opportunity to determine whether there is general rapport between the parties and whether their ideas about the future management of the company align.

This is also crucial for a successful transition and smooth business succession. The management presentation usually takes place as a visit to the seller’s site, including a tour of the facilities.

Set Up a Virtual Data Room

If interest from both buyer and seller continues after the management presentation, a virtual or electronic data room is typically established.

A virtual data room is a secure online platform accessible via the internet and protected by a password. On this platform, all relevant documents and data for the company purchase are securely managed and stored.

The Due Diligence Review

The Due Diligence review, or simply "DD," literally meaning "required diligence," is conducted by the potential buyer. Its purpose is to examine the business model of the company under review with regard to potential opportunities and risks and plays a decisive role in determining the company’s value.

Due Diligence includes the review of economic, legal, tax, and financial aspects of the company. It is of great importance to the buyer during the transaction process and is usually carried out by a specialist advisor on the buyer’s side.

4. The Contract Phase of the Company Sale

Do You Have Multiple Interested Buyers for Your Company?

If you have proceeded this far with several interested parties, a bidding process for your company may take place. In this case, you can choose your “preferred buyer” or encourage other bidders to improve their offers.

Contract Signing – The Signing

The final aspects to be clarified include structuring the transaction and securing transaction financing. Once these matters are resolved and both parties are satisfied with the negotiation results, a notary appointment is scheduled.

At the notary appointment, the transaction is officially notarized and the contract is signed, also known as the signing.

The Final Closing

The last step is the closing, during which the agreed purchase price is paid and the shares are transferred. Once this step is completed, the sale is successfully concluded and can be celebrated accordingly. For the buyer, the challenge now begins to integrate the company, while the seller can focus on new goals and start a new chapter in life.

The final contract phase is characterized by negotiations and contract signings. However, this phase not only marks the end of the specific sales process.

With the completion of this phase, you have achieved more than just a company sale: you have successfully passed your business on to the next generation and secured your life’s work for the future through proper business succession.

List Your Company on viaductus Today!

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Are you looking to acquire a company? Create your purchase listing now and increase your chances of buying genuine “business gems.”