In the event of a sale, timing is crucial to success!

In just under 30% of handing over the baton of family businesses, these do not take place within the family (approx. 55%), nor does someone from the workforce take over, for example by means of an MBO (just under 20%, staggered over time or completely).

In these up to 30% of company transfers, an external investor takes over (often also staggered over time with e.g. 51%, 25%, 24% with or without call/put agreements). 

Especially in the case of SMEs - and again particularly in the case of small companies with sales of around EUR 2 - 25 million - the valuation of the company is highly volatile and very dependent on the current market situation.

Recognising and exploiting the right time is therefore extremely important for success. However, this also means that the company must be fully prepared for the upcoming transaction at the right time in order to be able to finalise it in a ‘hot phase’ of usually less than 6 months.

And of course: company transfers can also fail during the preparation and negotiation phase - the seller or potential buyer pulls out, the timing suddenly proves to be unfavourable due to external factors or the withdrawal of the previous owner fails for family or social reasons. This should be avoided as far as possible with the help of competent personal support from the sales side. 

When it comes to preparing for a ‘hot phase’, advisors such as our AAA Advisors can help, if necessary with the assistance of financing, sales and purchase agreement experts from our network of carefully selected Business Alliance Partners.

One AAA Advisors Business Alliance Partner for supporting such transactions is Sigma Corporate Finance GmbH. The CEO of Sigma CF brought along a case study for our Stuttgart cooperation event with the FEA ‘’Handing over the baton as part of the corporate strategy‘’, in which the example of a transaction that unfortunately failed in the end can be taken away as a lesson on how crucial the right timing can be. 

In this specific case, a prospective buyer had submitted an offer at around the peak of the coronavirus pandemic in Germany, which, in addition to a good price, would have meant the continuation of the successful company at the location. Shortly afterwards, however, the 70-year-old sole shareholder withdrew from the sale and did not sell. The process was cancelled.

The company's value plummeted after coronavirus, and the level achieved during the pandemic could not be maintained due to a lack of investment in production and marketing.

Excerpts from this case study by Sigma Corporate Finance here as a PDF (sorry, in German only). Conclusion: in addition to optimal timing, the ‘binding’ clarification of all factual and emotional sensitivities in the run-up to a ‘hot phase’ is of the utmost importance. Take advantage of the experience of our AAA advisors in conjunction with our network of excellent business alliance partners.