7 key steps to successfully transferring your business

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25 February 2018 - 18 h 40 min

Publié par Joinzee

Entrepreneurship

Actualités

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Transmitting your business is an essential step in the life of an executive. It can take place at any age and for any reason: retirement, new projects, new ambitions,… To succeed in this business sale project, it is necessary to be organized and respect a certain sequence of events.

 

1/ Selling your business at the right time


The timing of the sale of your business should not be a coincidence. It is situated at the confluence of 3 factors :

  • – The health of your company and the trend of its development, which will define its intrinsic value
  • – The economic situation, which will be a strong lever to enhance the value of your structure
  • – Your patience and your future plans, because you are the main actor of your succession

 

The transfer of the company you have developed, or even created, involves psychological preparation, letting go. Relative to each, the strength of the attachment will require a more or less long delay before starting the process.

 

 

 

2/ Carry out an assessment of your company’s valuation


Having your company evaluated is an essential step in any transmission project. To strengthen your negotiating position, know the strengths and weaknesses of your proposed sale of business on:

  • – The market, opportunities and threats, the state of competition
  • – The production tool, its condition, the investments to be expected
  • – The HR component, the social climate, the reception of the transmission by the teams
  • – Customers and current contracts, tacit or written commitments
  • – The financial, management and health aspects of the company

 

 

 

3/ Determine the value of the company to pass on

In the sale of an SME, the question of the valuation of the company is central… and not always obvious. Different valuation methods exist and coexist to evaluate the sale price of your business. They are based on turnover, wealth and profitability.

The main valuation methods are as follows:

  • – asset valuation
  • – the performance-based method
  • – valuation based on free cash flow
  • – the comparative approach method
  • – scale evaluation

 

The seller, usually accompanied by an expert consultant, will select the most relevant method (s) to define the amounts according to the selected criteria.

This evaluation stage will give an idea of the value of the business and will serve as a basis for negotiation with the buyer. The final sale price will be determined in agreement with the candidate for the takeover of the company.
Accountants, chambers of commerce and CCIs offer support to help you understand the value of your business. Mergers & Acquisitions consulting firms are also very successful.

 

 

4/ Finding the right buyer to pass on your business


To find a buyer, you will first need to define his profile (skills and financial capabilities). A buyer must have the skills of an entrepreneur, of course. Specific skills will be required to support the company’s development. It is advisable to look for qualities similar to those of the seller, as well as complementary skills.

Once the ideal buyer’s profile has been defined, you will have to start looking for him or conversely, help him to identify your disposal project. There is no miracle method or unavoidable structure.

 

 

The communication of your disposal project will pass through one or more of these channels:

  • – Classified ad sites
  • – word of mouth
  • – the network: specialised fund dealers, suppliers, clients, entrepreneur’s club.
  • – the websites of putting in touch with partners such as JOINZEE
  • – trade fairs specialising in the sale of businesses: meetings with potential buyers but also with organisations supporting the transfer of businesses.

 

5/ Defining the terms and conditions for transferring the company


At this stage of the sale process, a lot of work was done. You’re in the final stretch to pass on your business. A buyer showed a serious interest in the purchase. All that remains is to formalize, negotiate and conclude.

 

Lease-management, transfer of the commercial lease, donation… Depending on the legal form of the structure, transmitting your company can be done according to different methods of transferring the funds and/or assets.

 

transfer-company-business-sale

 

6/ Negotiate and close the sale


Negotiation is a crucial phase in the sale of a company. On the one hand, the selling company manager wants to carry out an optimal financial transaction. On the other hand, the buyer is forced to buy at the best price, so as not to get into financial difficulties.

 

The recipe for good negotiation to pass on your business includes a lot of psychology and common sense. The seller will respond to the buyer’s concerns and remove any uncertainties. The challenge is to prove to the buyer that development prospects are very good.

 

The promise of sale will be signed, once the conditions of sale clearly established and validated by both parties. It formalizes the details of the negotiations between the seller and the buyer and specifies the financing conditions for the sale of the business.

 

The deed of sale will be signed on the date foreseen by the promise of sale, upon obtaining the financing requested by the buyer.

 

 

7/ Accompany the buyer


Transmitting your business is not an empty phrase. Beyond the notion of transfer of ownership, operational transfer requires support over time. This is self-evident for ceding entrepreneurs who are committed to the sustainability of their “baby”. To get to know the teams, to understand the working methods, sometimes even the activity, to meet customers, suppliers,… The transmission is often concluded by a benevolent convergence of common energies.

 

 

 

JOINZEE gathers profiles of quality buyers, meeting your criteria. Find your successor on JOINZEE now!

 

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