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To successfully sell a business, one must be patient, responsive, and supported. It is essential to anticipate the timeline (valuation, search for a buyer, audits, etc.) even before addressing future organization (operational management, employees, clients, suppliers, bank, etc.) and the tax implications related to the sale. A transfer operation typically takes 6 to 12 months to complete. During this period and before initiating the sale process, it is crucial for the business owner to go through several stages.
Company Valuation
Just as an individual might have a biased view of the value of their real estate, a business owner is not always aware of market prices. Therefore, they should consult with their advisors—accountants, specialized valuation firms—to assess the value of their company using various calculation methods and ensure it aligns with their expectations.
Review of Legal Documents
A review of certain legal documents (such as statutes, shareholders' agreements, etc.) is necessary to anticipate potential obstacles to the operation. For instance, if the company's capital is fragmented, meaning it is shared among many small shareholders—often the case with startups—there may be risks of encountering shareholders who do not want to sell. If these shareholders have veto power, they could delay or even completely block the sale process. Reviewing these legal documents ensures the "liquidity" of the capital before entering the sale process. This step responds to the need for clarity and transparency expressed by investment funds.
Analysis of the "Target" Company
Various presentation documents outlining the activities of the "target" company should be prepared, highlighting the company's strengths and weaknesses, as well as development prospects. Buyers do not appreciate discovering hidden problems that could lead to the abandonment of the project by the candidate or a significant reduction in the proposed price. There are three key documents to be prepared by the seller:
- Information Memorandum: A confidential document—between 20 and 50 pages—gathering all essential and characteristic data about the company being sold: activities, client structure, financial, social, and tax situation, pricing, market positioning, etc.
- Teaser: A 1- to 2-page anonymized summary of the Information Memorandum, sent to potential candidates with a code name attached.
- NDA (Non-Disclosure Agreement): A confidentiality agreement binding potential candidates.
The teaser and NDA are first sent to the potential buyer. If the buyer confirms interest in the previously anonymous company, they sign the NDA to receive the Information Memorandum. The goal here is to preserve the confidentiality of the data related to the company being sold.
Targeting Potential Buyers
Targeting potential buyers, both in France and internationally (employees of the company, family members of the business owner, investment funds, industrial players, or individuals). To do so, firms specializing in mergers and acquisitions use databases and software tools that help identify and select market players who are interested in the target company, and who will then be approached by the M&A advisor.
If the company to be sold is in difficulty, the business owner will also need to rely on an accountant with a department specializing in restructuring, in order to manage the terms of the sale and protect both the business and the owner’s personal assets.
