These are the key preconditions for business sales in 2024.

The Optimal Deal?

When is a deal truly good? In the sale of your company, the price is naturally an extremely important factor, says acquisition specialist John Hoekman of Rembrandt M&A. "Entrepreneurs who want to sell their business often look at the price first. However, in the end, other conditions often turn out to be just as important."

Partially selling shares

According to John, many owner-directors only discover during the sales process that there are other options than selling 100 percent of the shares. "Sometimes it may be wise to sell only part of your shares. For example, because you may, on second thought, want to achieve certain growth together with a potential buyer, or because you wish to remain involved for a while as managing director. In such a case, a partial sale may turn out to be the best option."

Comparing different conditions

Don't forget: as an owner-director, you often hold the most important position within your company. For buyers, too, it can be helpful if they can rely on your expertise for a smooth transition. Of course, not every entrepreneur wants to stay actively involved after the sale, John notes. "Recently, I saw a case where an owner-director ultimately chose a party that, in the end, offered better conditions for his departure, rather than the highest bidder."

Comparing multiple buyers

According to John, it is always wise to approach several types of buyers. "By exploring multiple interested parties, you can find out for yourself which one offers the best terms. In addition, this creates healthy competition, which generally results in better deal terms and a better price."

Payment terms and pricing agreements

Another condition that can make a difference is how the payment is made. For the seller, it is often most attractive if the buyer pays the full amount at once. However, a so-called 'earn-out' construction is also possible. In this arrangement, (part of) the final purchase price is determined by the future profits of the company.

This is especially useful when the buyer and seller have differing views on the company's value during price negotiations, says John. "Both parties can then bridge the gap by including this earn-out in the purchase price. As a result, the final sale price may end up being higher or lower afterwards."

It is extremely important that you provide the right and complete information about your company and that you prepare the sale thoroughly. If you communicate openly and transparently about both the strengths and weaknesses of your business, the likelihood increases that both parties will be satisfied with the deal even after the transaction.

Securing a Business Sale

More and more often, a so-called Warranty & Indemnity insurance (W&I insurance) is taken out during a transaction to prevent disputes. The W&I insurance covers any damage resulting from the breach of certain warranties and indemnities in a purchase agreement. Such W&I insurance can be a good choice if you and the buyer want to reach a deal but cannot agree on the exact allocation of risks.

The advantage for the buyer is that they are insured against all unexpected risks that may lead to claims but were not fully revealed during due diligence. But such insurance is also beneficial for you as the seller, allowing for a smoother exit without additional conditions. If you want to make agreements on this with the intended buyer, it is important to anticipate this early in the sale process.

Real Estate

Real estate is also often an important condition in a business sale, John continues. "Some owner-directors prefer to sell the property along with the business. Others choose to lease the real estate to the buyer for a longer period, as an additional source of income besides the transaction amount. This element, too, can be taken into consideration in the sale process, alongside achieving a suitable price."

What makes the difference for you?

Of course, the price is often the main factor. But the overall picture has to be right, John emphasizes. “Sometimes, after an analysis, it turns out to be wiser to wait a little longer before selling. In some cases, it may even be smarter to go with a lower offer if the underlying conditions are more favorable. By starting the process in time, you’ll discover what truly matters most to you. That way, we can ensure a deal where everything aligns — not just the price.”

E-mail John