Seven elements for the optimal transaction

Selling your company — you often get only one chance to do it right. On top of that, a lot comes at you during the sale of your business. So what’s the best approach? A comprehensive strategy, based on 7 interconnected elements, is essential for a successful acquisition.

M&A Sell-Side

Besides the legal and financial aspects, emotions often play a significant role in the transfer of your life’s work. Selling your business is a once-in-a-lifetime event. A good acquisition advisor helps you streamline the sales process and achieve the best possible outcome.

From thorough preparation to the personal connection between entrepreneur and advisor: it is the sum of all parts that determines the strategic, financial, and personal outcome.

Seven elements for the optimal deal

As an M&A specialist at Rembrandt M&A, John Hoekman has guided dozens of entrepreneurs across various sectors in the sale of their businesses. A ‘holistic approach’ is essential for a successful acquisition, Hoekman emphasizes. “From thorough preparation to the personal connection between entrepreneur and advisor: ultimately, it is the sum of all parts that determines the strategic, financial, and personal outcome of a transaction.”

At Rembrandt M&A, they therefore distinguish 7 elements, all equally important for the optimal deal—and which also play a key role in selecting the right acquisition advisor.

Element 1: a thorough preparation

A thorough preparation is a crucial first building block for a successful transaction, Hoekman explains. “At Rembrandt, we call this ‘the power of the plan’: if you start preparing your business for sale early enough, it saves a tremendous amount of stress and time in the end. This includes thinking about succession, as well as gathering the right information (financial, legal, and tax-related). Being able to substantiate the value of your business with high-quality data and figures works wonders for its marketability.”

“By providing potential buyers with accurate and reliable information, you greatly increase the chances of receiving a realistic, high-quality offer. A good acquisition advisor is capable of preparing a strong information memorandum that effectively positions your business.”

Element 2: the right strategy

Keep in mind that every case is truly different, Hoekman emphasizes. “That makes it all the more important to carefully consider the right sales strategy—the second element that determines the success of a transaction. What type of buyer are you looking for: someone within your own circle, family members, current staff, or are you actively seeking an external strategic or financial party? As a business owner, do you want to remain involved with the company in some way after the sale, or do you want to step away completely? Are you only considering potential buyers from your own country, or are you also looking across borders? These are all questions that influence your sales strategy.”

“That’s why we always define a tailored approach together with the entrepreneur upfront. What helps is that we have been able to automate many process steps nowadays—from automatically importing financial statements and such to the automated distribution of documents. This saves a tremendous amount of time, allowing us to spend even more time on providing strategic advice to the entrepreneur.”

Element 3: a dedicated deal team

A third important element that determines the success of the business sale is the composition of the deal team. It is always wise to engage external expertise, Hoekman emphasizes. “There are so many legal, financial, and emotional aspects involved in a business sale that it is virtually impossible for an entrepreneur to handle it all alone—let alone have the necessary expertise in-house.”

“Every company and sector is different. So, choose an advisor who has the right experience for your specific situation. And: is continuity sufficiently guaranteed? A broadly composed deal team—with multiple specialists who complement each other and can take over each other’s tasks—is essential for a successful sale.”

Element 4: a personal approach

At the same time, pay close attention to the personal connection, Hoekman continues. “A sale is a long-term process that requires intensive collaboration. That makes it all the more important that there is a good personal fit. And that your advisor can clearly explain how the process works and what is specifically expected from you as an entrepreneur.”

“Also realize that, especially as the process nears its end, a sale rarely fits neatly into regular office hours. That’s why it’s important that your advisor is always easily reachable.”

Element 5: a strong network

Both formal and informal contacts play an important role in the success of a deal. Take a critical look at an advisor’s network as well, Hoekman emphasizes. “A good advisor knows how to tap into the right contacts at the right time. An international network can also come in handy; it often pays off to look beyond borders for potential buyers. Even the best advisor sometimes engages external specialists for specific areas—ranging from accountants and tax experts to lawyers and due diligence professionals. In that case, it’s useful to have quick access to the right expertise through the network.”

Element 6: in-depth sector knowledge

The sixth building block for a successful business sale is sector knowledge. Hoekman explains: “Each sector has its own specific characteristics and peculiarities. The dynamics in the installation industry or manufacturing are very different from those in, for example, construction or childcare. It makes a difference if you engage an advisor with extensive experience in your specific industry, who has solid knowledge of what’s happening in the market and also possesses the right contacts within that sector.”

A good advisor knows how to tap into the right contacts at the right time.

Element 7: a strong track record

The seventh and final element that plays a role in a successful business sale is, of course, the track record of the acquisition advisor. “Be sure to do your research once you decide to put your business on the market. Which advisor has the most experience in your sector and offers the greatest continuity? The more specific knowledge and experience an advisor brings—tailored to your own company—the greater the chance of a successful transaction.”

Every move counts

Selling your business: often you only get one chance to do it right. “When you, as an entrepreneur, pay close attention to these 7 elements and their interconnection, the chances are significantly higher that you’re heading towards the optimal transaction for all parties involved. Or, as we say at Rembrandt M&A: every move counts.”