Thinking of selling your business? Start early!
Anyone looking to sell their business has plenty of options. Partner Ferdi Kramer advises starting early when considering possible scenarios: “That way, you’ll have enough time to streamline the sales process.”
The first week of January is always busy at Rembrandt M&A, says acquisition specialist and partner Ferdi Kramer. “The holiday season prompts many entrepreneurs to reflect on the future. What do the coming years look like? Sometimes, the conclusion is that the time is right to start thinking about transferring the business.”
Even Younger Entrepreneurs Are Asking the Question
The type of entrepreneur reaching out varies widely. According to Ferdi, the question of business succession comes not only from older owners looking to hand over their company to the next generation, but increasingly from younger entrepreneurs as well.
“Of course, we regularly speak with business owners thinking about securing their retirement or transferring the company within the family. But more and more, we also see entrepreneurs in their thirties who have spent years building their business day and night—and are now looking for a partner to help them take the next step. The core question remains the same: what are my options when it comes to selling my business?”
More Than One Path to Take
The range of possibilities is broad, explains Ferdi. “Often, succession starts by considering direct or extended family members, or members of the current management team. But there are many options beyond that. Take a Management Buy-In (MBI), for example, where an external manager—perhaps a director from a competing firm—takes over the business. It could even be a long-standing business contact who has become a trusted advisor.”
Then there’s the Management Buy-Out (MBO), where the existing management team takes over the company, including shares. Other possibilities include selling to a Private Equity firm or a strategic buyer. Listing the company on the stock exchange can also be an option.
The Smart Exit
Another route we offer at Rembrandt is the Smart Exit. In this scenario, you as the entrepreneur stay on board for a while, while gradually transferring the business to a group of informal investors. The benefit is that you can secure part of your wealth early, while staying fully in control. Our network includes several informal investors interested in this type of structure.
The Emotional Aspect
Whichever option you choose, a successful business transfer involves much more than just financial, legal, or tax considerations. The emotional aspect can be just as important. “Sure, some entrepreneurs can approach the process in a purely businesslike way,” says Ferdi, “but for many, it’s a highly emotional journey. That’s why it helps to have an independent advisor who can manage expectations on both sides and safeguard the calm and care needed to navigate the process successfully.”
Private Equity
At Rembrandt, we have a number of leading Private Equity firms in our network. Still, there are quite a few “prejudices” about Private Equity. “Many entrepreneurs still believe that these parties are mainly out to generate as much profit as possible in a short amount of time, but that’s certainly not always the case. Private Equity has now become a serious option. It would be a shame if this form of business acquisition were dismissed too quickly. We see more and more parties that truly can – and want to – take a company into a new phase.”
Careful decision
Another scenario in which entrepreneurs must proceed carefully when selling their business, Ferdi continues, is when the company operates in a sector where a lot of consolidation is taking place. “In such cases, it’s important to clearly assess a number of factors before the intended sale. What is the long-term independent viability of the company?”
According to him, many advisors focus only on closing the deal and the short-term profit. “Whereas in these situations, it’s actually essential to make a well-substantiated decision. Perhaps the conclusion is that even in a consolidating market there remains space for independent players – but those are the kinds of questions that need to be considered in time, and objectively.”
Every move counts
Entrepreneurs planning to sell often seek advice from someone who has also sold a business. However, Ferdi emphasizes that this is just one experience within a specific context. “Companies differ greatly, as do the industries in which they operate. So that one experience certainly doesn’t tell the whole story. Every deal is different. And every move counts during the acquisition process.”
So, start thinking early about how you want to sell your business in the future. Even if it’s years away, you can never start planning for succession or a takeover too soon. This way, you’ll have ample time to streamline the sales process—financially, operationally, and legally.