14 / 10 / 2020
When deciding to sell a company, the entrepreneur should remember that potential buyers, regardless of whether they are investors, who plan to continue the company's activity or entrepreneurs intending to purchase the company for other purposes, will scrupulously analyse its activity and market environment. Therefore, the owners should prepare both themselves and the company for such a process. The better the company is prepared for sale, the better the final effect will be achieved by its shareholder. However, preparing a company for sale may require several organizational transformations and formal and legal changes. What kind of modifications are required? You will find out everything shortly.
Financial condition of the enterprise
In the case of financial data, investors' interest will focus on revenues, profitability and financing structure. Investors prefer companies whose sales are increasing and it is accompanied by an improvement, or at least the maintenance of the profitability level. Since each industry is unique, it is difficult to speak of specific, objective numbers separating attractive from less attractive companies. However, it is worth remembering that investors perceive the company's results compared to the other companies in the sector. The better the results in comparison to the competitors, the more attractive the company is in the eyes of investors. For potential buyers it is also important how business development is financed, i.e. whether the debt and asset structure correspond to the company's needs. Buyers will look at whether external capital is used effectively. An over-indebted company does not have, from the owner's point of view, a large transaction potential, as its market valuation will always be adjusted for the debt level.
Company's real estate and movables condition
Apart from the results, the financial assessment of a company also includes all assets assigned to it, namely: real estate, equipment and means of transport. Therefore, before the sale, it is worth to take care of their condition and carry out possible repairs and renovations, as this may have a highly beneficial effect on the financial value of the enterprise.
Introducing a comprehensive approach to all processes is essential in every company. Measuring everything possible, introducing KPIs, writing down procedures and automating as many tasks as possible. The less we depend on people and more on the system, the easier it will be to manage the company and implement a new owner. This is one of the elements leading to value creation.
Before the sale, the company must be set up on an entity with legal status. Simply put, a company should be established or transformed into a limited liability company. The company itself may already be sold. If we are talking about a business or a civil partnership, we can sell it as a company or an organised part of a company, but this gives rise to considerable scope for abuse.