Preparing for the sale of the company

Facts and figures as a basis for sales

If you want to sell your company or individual divisions, you should consider a few things in advance. After all, preparation is everything when selling a company. The financial situation must be absolutely transparent in order to be able to determine the current numerical value of the company. Only those who can put clear facts and figures on the table will receive the maximum purchase price for their company.

Reasons for a planned company sale

There are numerous reasons for selling a company, be it private reasons, positive or negative economic prospects or others. Having an initial idea of the value of the company protects you from surprises and allows you to act in a more targeted manner. Especially as some reasons for the sale also have an impact on the company value to be determined. In any case, owners of small and medium-sized companies in particular tend to overestimate the value of their life's work.

Likewise, many owners underestimate the long-term preparation required to objectively determine and represent the value of a company when planning to sell it. This is because the highest possible company value can only be justified with sufficiently number-based arguments. The sooner you allow yourself to be guided by the available figures and data rather than your feelings, the more realistic the result of the analysis will be. This is why many entrepreneurs bring a financial professional on board.

Important parameters for company valuation

The valuation prior to the sale of a company is based on a number of important factors. In addition to the current figures and data, these include the individual size of the company, the type of company or sector and the number of employees that may be taken over. In order to achieve the highest possible sales value, you must therefore not only create financial transparency, but also take other factors into account. Nevertheless, the respective figures will probably play the most important role in the sale of any company. You should therefore be able to fully document your cash flow and other parameters and bring order to your numerical data. This is part of the preparation for every company sale and should not be left to chance, but rather to a professional financial management consultant.

Key points in determining the company value

There are various calculations that need to be made in order to determine the value of a company. The following calculations are part of the preparation before every company purchase and are part of the valuation:

• Sales forecast, order situation and turnover
• Contribution margins of products and services
• Past and future development of the EBIT margin
• Past and future cash flow
• Determination of possible asset and/or property values
• Debt and equity ratio
• Structure and quality of outstanding receivables
• The number and quality of employees working for the company as well as the turnover in recent years
• The entrepreneurial value of your corporate identity
• The evaluation of individual unique selling points
• All measures to increase current sales and returns and many other factors

Changes in company valuation

To determine the value of a company, you need the audited financial statements from several past years. On the other hand, a company valuation is always a snapshot in time and is therefore subject to change. Any change in the company's figures will also have an impact on its valuation. Some of the more stable factors that influence the company's value include the location of the business and the industry in which it operates. These factors can significantly decrease or increase the actual company value, which is initially based on numbers.

Increases company value: optimizing your company finances

Whether it's invoicing, receivables management and dunning, costing, integrated financial planning or other processes that have a long-term and short-term impact on your company's financial situation: You can only justify a higher purchase price for your company if you optimize your company finances, i.e. pay attention to the greatest possible efficiency. Numerous processes can be simplified and optimized with the help of digitalization. It is even better to hire an experienced financial management consultant to take care of the preparations and important number optimization when selling your company. After all, it is always better if one person keeps track of all the parallel processes and tasks and manages the finances, figures and data relating to the sale of the company.