As a company director contemplating a business transfer, it’s essential to understand the key steps in the process. Here’s a glance at four strategic stages.
What are the primary steps in a business transfer?
1. Prepare Psychologically
Successfully transferring your business is a significant challenge that requires a long-term commitment. To set yourself up for success, there are two key areas to focus on. First, set aside the emotional bond you have with your “baby,” put yourself in the shoes of the buyer, and consider their demands. This perspective shift will help you gain some distance.
Next, honestly consider if you’re genuinely prepared to sell your business. If, for instance, you share with friends and family about a potential sale, but then change your mind, it could negatively affect your company’s image and value.
2. Prepare “The Bride”
To facilitate a successful business transfer, you must present your company in the most favorable light, showcasing its most attractive features, while maintaining objectivity. Remember, a serious buyer will audit the accounts and verify your assertions. It’s wise to conduct a comprehensive 360-degree diagnosis of the company, identifying any barriers (financial, legal, commercial, organizational, etc.) that could hinder a potential transfer.
The process of valuing your company is crucial. Various methods can be employed to assess your company’s worth. Depending on whether you’re selling your business or your shares, the valuation methods will differ. Lastly, be realistic about the selling price: the value obtained through the valuation process will merely serve as a starting point for negotiation with a buyer.
3. Find the Right Buyer
Identifying the ideal buyer is a critical phase in the business transfer process. One of the challenges lies in maintaining confidentiality or initiating contacts without disrupting the company, particularly if there’s a potential rumor of a transfer.
Don’t hesitate to explore all potential options. The perfect buyer might be a family member, an acquaintance, a competitor, or even an employee of the company. If it’s an employee, they’ll generally be flattered to be considered and will likely adopt a more favorable attitude towards another buyer.
Read more: How to find a buyer?
4. The Transmission Phase
This phase commences when a serious buyer expresses their intention to negotiate the takeover of your company. It’s a crucial period during which both parties rely on professionals in the field of business transfer. Actoria, specialists in business transfers for over 25 years, can guide you through each step to ensure the transaction unfolds under the best conditions.
Before negotiating the transfer of your company, meaning reaching an agreement with the buyer on the terms of the transfer, your potential buyer will conduct an acquisition audit or “due diligence.” This step is to verify the accuracy of the information you’ve provided and to mitigate potential risks. The aim of the audit is to familiarize themselves with the target company, and it must be performed meticulously. Be wary of candidates who show little interest in this stage. A lack of involvement could indicate a weakness in your company’s takeover plan.
