“If you can sell a house, you can sell a company.” “You just need to talk to some competitors, sign a contract and give them the keys.” There are many myths about how businesses are sold, but beware – trusting them could expose you to unnecessary risks, like accepting a bad offer or damaging your reputation. So instead, use our experience to get a better understanding of the process.
Essentials of selling a business
Selling a business is a complicated, time-consuming process that involves many different aspects (financial, legal, technical, negotiation) – that’s why business owners often use the services of a consulting company that will take care of the entire process for them, allowing the owners to keep their attention on the business while staying in control of the sale process.
Experienced consultants know how to create an offer and who should be approached and when. They will also guarantee discretion through the whole process – if your suppliers, clients, or employees learned about a potential sale too soon, their trust in your company could take a serious hit.
By working with experts, you will show the market that you have thought this through carefully and that a transparent, professionally handled transaction is your top priority.
Did you know that consultants don’t get the bulk of their fee until after a deal is closed, bearing all transaction-related risks? References are also a great way to assess their credibility – make sure to check out how many deals a consultant closed and how big they were.
Selling with consultants – how does it work?
1. Searching for potential buyers
- 2-3 weeks
First, the consultants will take a deep dive into your business to really get to know it. Then, with your help, they will put together a list of potential buyers based on the current market situation and knowledge of the sector. Following outreach to potential partners will be adapted to your needs. In some cases, consultants will use their connections to discreetly explore interest of potential buyers without naming your company. Most often, however, they will be invited to a non-public tender.
2. Creating a business profile
While working on a list of potential buyers, consultants will also create a brief, single-page profile of your business to present it as the unique investment opportunity it is. To make sure there are no rumours floating around the market, the profile will be anonymised, containing general information only. The profile is then distributed to potential buyers, giving you a rough idea of their interest in your company.
Results:
- A list of potential buyers is put together
- A short profile of your business is created
- Potential buyers are approached
3. Signing NDAs and receiving non-binding offers
- 6-8 weeks
The consultants will have interested buyers sign an NDA before they receive more details about your business, like its name. Next, the consultants will create an extensive information memorandum to provide potential buyers with enough information to propose first non-binding offers, with offer format and deadlines also determined by the consultants.
After receiving non-binding offers, you and your consultants will meet with potential buyers to choose those you want to continue negotiations with.
Results:
- An NDA is drafted and signed
- An information memorandum is put together
- Non-binding offers are received
How do you determine a company’s value? There are many different methods used for appraisal, but the real value is often revealed by the invisible hand, not by any expert assessments, which is why approaching a number of companies and creating a competitive environment among potential buyers is key.
4. Due diligence of your business
- 6-8 weeks
Potential buyers need to know as much as possible about your business to present their final, binding offers. Most often, they will hire their own consultants to perform a due diligence of your business, focusing on financial, legal, and tax aspects.
Due diligence can be a stressful, time-consuming process, so better brace yourself. Potential buyers and their teams will examine the way your business operates, revealing potential future problems. They will require extensive amounts of documentation from you, ask a plethora of questions, visit all your business premises and speak to your managers.
At this stage, you will need to provide potential buyers with a variety of materials and documents, usually in an electronic form. Your consultants will manage he process, coordinate with their counterparts, and make sure that due diligence is performed properly, moving smoothly towards the desired end result.
Results:
- Due diligence is performed
- Binding offers are received
5. Closing the deal
- 2-4 weeks
After receiving and assessing binding offers, you will need to select your buyer, negotiate contractual terms, and close the deal. You will need to hire a legal advisor at this stage, if you haven’t already, and prepare to negotiate the final terms and wording of transaction documents (usually, these include a purchase/sale agreement, a lease agreement, and some type of management/employment agreement).
Negotiations can be both quick or drawn out, but they are always intense, and this is where you will truly appreciate the expertise of your consultants and legal advisors and their ability to see whether the proposed terms are standard and point out what’s acceptable and what’s not. Often, they will pre-negotiate the final form of transaction documents or certain complicated matters with the counterparty, putting you in a better position to close the deal successfully.
After all agreements are signed, the transaction is settled (meaning the funds and business shares are transferred accordingly) and the business is handed over. Your transaction advisor will be with you every step of the way, until the process is finalized or until you need them.
Let us help you
At KPMG, we are ready to help at any moment; we can guide you through the entire process right from the start or jump in at a later stage. Most of our fee is paid after the sale is finalized, and if a deal falls through, you keep our fee. However, our team of experienced transaction consultants, lawyers, tax advisors and financial experts will do all in their power to help you close the best deal.
Fell safe in our expert hands that carry out the largest number of transactions per year in Czechia – we closed a total of 13 deals just last year alone.
Let’s talk and see how we can help you!
