How to sell your company in hard times

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Selling your troubled company may be the best way to save the structure and the employees. Whatever the embarrassments, the prerequisites are always the same: a rational use of the available cash.

There are many reasons to sell your company in difficulty: the cessation of payments, the decrease in demand, or the lack of anticipation of market changes. To sell in the best conditions, it is advisable to face reality with lucidity. The more you have a precise picture of the causes that lead to the transfer and the more transparent you are with potential buyers, the more likely the company will continue its activities after the transaction.

The temptation to disguise and embellish reality is great. However, you would not be doing anyone a favor. It will not increase your chances of selling.

SELL YOUR COMPANY IN DIFFICULTY IN ALL TRANSPARENCY

When selling your company in difficulty, it is always best to make your intentions clear. Honesty is the best way to get an extension from a financial partner or supplier. Similarly, if you are in contact with a buyout investor, don’t try to hide anything from them. If they find out, they will end the negotiations overnight.

Keep in mind that a potential buyer is interested in the transaction because they think they are getting a good deal. That said, they are not willing to take an undue risk. They need access to all the information to make up their mind. It is up to you, as the seller, to take care of your communication. Be honest and avoid approximations. You must prepare your transfer.

GOOD CASH MANAGEMENT

The preparation of the transfer consists essentially of financial cleaning. This is why, in order to sell your company in difficulty, you must first clean it up and stabilize it. Pay attention to all the expenses that you can reduce and contact your creditors. In this way, you preserve the value of your business. You can use this asset when negotiating with the buyer. You can also look for new ways to generate income or special financing to improve your cash flow.

You should also prepare a financing (or restructuring) plan to turn the business around. You should also consider preparing a business plan based on objective assumptions and a detailed timetable. This will optimize your exit conditions. Do not forget the legal aspects. Choose your buyer carefully. The number of months depends on local regulation, but usually, if the company fails up to X months after the date of the transfer, the Commercial Court can declare the transferor liable. To prevent this situation, you can apply to the Commercial Court for a conciliation procedure.

If you need to sell your company in difficulty, let our Actoria consultants, experts in business transfer, accompany you.