The M & A process — transaction phases and their specifics

Demographic developments mean that family solutions are becoming increasingly rare when it comes to business succession. As a result, more and more entrepreneurs are having to place their businesses in outside hands. To achieve this, buyers and investors must be sought, the overall process must be optimally designed, and tax risks must be largely eliminated. Of the individual transaction phases of the M & A process, the phase of determining the optimal enterprise value is the one where the most pitfalls lurk. When calculating the value of a company, various factors must be taken into account in order to obtain an accurate result.

Phase 1: Project plan

In the context of a company sale, a company succession or the search for investors for a company, there are a number of risks that can jeopardize the project. Experienced M & A consultants master the basic rules perfectly. But consultants who only accompany a company sale from time to time are threatened with failure at every turn. At the beginning of such a process, a project plan is indispensable.

The entrepreneur must first be clear about the point in time at which he wants to sell his company or needs to acquire capital partners, for example, due to increased investment volumes, pressure from customers or banks. - Then, a stringent M&A plan should be established that includes clear timelines for initial investor approaches, negotiations, and final negotiations with contract closing. It is dangerous if the entrepreneur has in the back of his mind that he will someday take this step.
will have to go, but practically "for the time being, just look at what opportunities arise". - This may result in a prolonged period of uncertainty, as the company is repeatedly traded on the market as a candidate for sale. The longer it then does not come to a real sale, the worse the reputation of the company ("The company is probably indigestible!"). Such uncertainty also contributes in the circle of senior executives to the fact that perhaps one or the other good performer will look elsewhere because the future direction is not clear.