Business acquisition SME: this is the roadmap


Business acquisition SME: this is the roadmap

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You are an SME and want to buy or sell a business, but how does it work? A good business transfer requires more time and attention than you think. There are often many legal and financial aspects to consider. An expert who represents your interests and clearly maps out all the steps can be of great service. In this article we list in a step-by-step plan the aspects involved in a business transfer in the SME sector.

  1. Take stock of your needs

    You probably built your business with a lot of thought and love. Selling it deserves equal attention. So first, take some time to consider for yourself the reason you are selling the business. Take stock of what you want financially, but also consider what the sale means for you personally. What will you do next, for example? And what is financially necessary and feasible?
  2. Prepare the business acquisition properly

    Once you have made the decision to transfer, it is time to take a close look at your company. Make an analysis of the market in which you operate, your company's financial position and the quality of management and organization. Have this all documented in an information memorandum, which potential buyers will have access to. A expert adviser can help you put things on paper correctly.
  3. Prepare your business for transfer

    A well-stocked customer base or a successful Web shop are not enough to convince buyers. You should also be able to show correct financial statements going back about five years. Make sure the balance sheet is clean of private debts and assets, for example. Make it clear how profitable your business is and show that the company is in core health. Sometimes changing the legal structure of the business can have significant tax advantages. Have an expert look at your legal structure and your balance sheet to make sure you are presenting your business in the best possible way.
  4. Determine the value of your business

    If your business looks tiptop then it's time to make the value to be determined. Various financial calculation methods are available to you for this purpose. For example:
  • the asset approach that assumes the balance sheet of the company to be valued. A common valuation method is the intrinsic value method: the difference between the (market) value of the company's assets and liabilities, or equity.
  • The income approach that relies on the company's financial data. A common valuation method is the Discounted Cash Flow method (DCF method): this method uses projections for the coming years of the company based on cash flows. These expected future free cash flows are discounted at the weighted average cost of capital (WACC) less the market value of interest-bearing debt, plus freely distributable cash and nonoperating assets.
  • market value that assumes comparison against competitors. This uses more public key figures and industry data for a comparative market value method and comparable transaction method.
  • A combination is, of course, also possible. Be advised by experts in this regard.
  1. Set the price

    Once you have determined the value of your business, it is important to set the price. In doing so, ask yourself what is the minimum price at which the business may leave and consider what is a realistic maximum for the sale price. It makes your negotiating position stronger and more relaxed: you know the ranges.
  2. Find the perfect buyer

    First, find out if there is a suitable buyer in your area. Sometimes you can transfer the business to a child or someone in your business network. If that fails, you can put your business up for sale on online platforms or other business networks. Then, make sure you have a solid profile that excites potential buyers.
  3. Conduct negotiations

    Once you have found a buyer, negotiations can begin. Be sure to document all the steps within the negotiation process to avoid unpleasant surprises at the end. Also, have an expert document in a confidentiality agreement that the potential buyer will handle confidential information with care. Furthermore, it is common to draw up a letter of intent. The buyer will have the information you provided verified in a so-called due diligence study. Next comes the most important step in this process; drafting and negotiating the purchase agreement.
  4. Sell your business

    Then when all 7 steps have been completed correctly, it is time for that very last signature and delivery. If there is an equity transaction, a visit to the notary will be necessary to finalize the sale and delivery.

The business you have put your heart and soul into for years deserves the very best sales process possible. If only because you simply want the highest price for your business so that you benefit financially as much as possible from the sale. Because no one can be an expert in everything, it pays to hire an expert who is on your side and acts out of your best interest. So that your hard work is fairly rewarded.

How can a specialized lawyer help you as an SME with a roadmap for an SME business acquisition?

As an SME, you are used to doing a lot yourself. Over the years you have taught yourself most of the important skills, but then the time comes when you want to sell your business. You have no experience with that yet. Of course, you can figure out a lot yourself, but still, you want to get the most out of it and be sure that everything is optimally taken care of. That is why you need a business acquisition lawyer to help you achieve that goal.


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