How and where to sell my company?
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How and where to sell my company?
Making the decision to sell a company is a step that entails a lot of work and internal processes within it, in order to ensure that everything is in order, is transparent and meets the requirements that a buyer needs for the transfer or acquisition of this
From your place as a seller and owner of a company, it is important to remember that the value you perceive of the company may not be correct, therefore it is necessary to hire a expert appraiser to know the real value.
And in this process of putting the information for sale in order, the area heads must be included, with the purpose of obtaining reports on the current status of each department and other data that we will talk about below.
What is a business transfer?
It is the transfer through a rights assignment contract of all tangible or intangible assets and liabilities that make up and are owned by the company, in exchange for a monetary sum based on the financial statements and economic history of the company in question.
It can be the total sale of a company or part of it, such as shares.
Before this, the Law requires sellers to be informed about the possible sale and have their prior approval to continue with the transaction.
The most common in these cases is to request the transfer due to lack of time to attend to the business, retirement, due to illness of the owner, economic need, or simply to be able to invest in another existing or owned business, among many other factors.
Types of business transfer
There are different types of transfer depending on the situation and the purpose, among the most common are:
- Assignment of lease contracts: It refers to when a new tenant comes to replace the old one, assuming all its obligations towards the lessor.
- Transfer due to death: When the contract does not stipulate another clause, the heirs or legatees can occupy the place of the deceased person with the same terms, but it is necessary that the lessor be notified of the event within two months of the event.
- Subletting the business premises: When the contract allows it, the tenant has the possibility of renting to a third party without consulting but notifying the landlord about the event.
- Transfer to a company: Being the owner of the premises or business can only be transferred, that is, leave someone else in charge to become the tenant of the same.
- Transfer with other contracts: In situations such as merger, spin-off or transformation of another type of company.
- Transfer with other contracts: When specific inventories are sold, or the new lessee acquires debt from the old one.
- Transfer of old rent: When the current tenant dies like his spouse, the possibility of transfer of the business opens and the landlord has the obligation to continue with this contract for 10 more years, with certain clauses stipulated by the 1964 Law.
How to sell my company?
The sale of the company brings with it a long and mostly internal process, we can classify it into 8 steps main ones that will help speed up and open the doors to future buyers.
Step 1
Decision making
The first step is making the decision to sell the company, based on various factors.
Step 2
Define sales medium
Here, the different possible transactions are evaluated with the board of directors, such as: purchase of the company and transfer of the workforce, financial buyer or strategic buyers.
Step 3
Review company structure
With the help of the area heads of each department, all unfinished and pending processes must be reviewed, debts that remain in the company and everything must be delivered in order before the sale.
Step 4
Collect financial information
The first step is making the decision to sell the company, based on various factors.
Step 5
Collect legal information
All the information like; Incorporation documents, permits, license agreements, employee and lease agreements, employee numbers, government documents, etc. And along with the info. financial company, a business summary is made to present it to the potential buyer.
Step 6
Deliver to a professional
It is advisable to hire a professional to assign the real value of the company, with the help of the information mentioned and compiled in the previous points, a appraiser You will be able to determine how much the company is worth in a truthful and transparent manner.
Step 7
Search for a buyer and negotiation
The next step is whether it is possible to work hand in hand with a mergers and acquisitions advisor to evaluate potential buyers, who will be able to preselect some and channel them so that only the most suitable for the purchase arrive.
Negotiation goes hand in hand with the needs of the buyer and seller.
Step 8
Transaction or sale
Finally, the transition period where the seller usually provides a period of cooperation so that the seller can understand and become familiar with his new acquisition, key points are explained and the information is transferred.
Where to sell my company?
Putting a company up for sale has a different process than any other product or service. To do this, it is necessary to contact a mergers and acquisitions (M&A) advisor, who acts as an intermediary between the seller and the potential buyer, exercising actions such as financial advice and in this case the closing of the sale of shares or total sale of the company, will also help with the selection of possible buyers a priori and may be at the time of the negotiation.
In other cases, the services of a commercial broker may also be required, who will also be a representative of one of the two parties involved in the sale and carry out the negotiation based on previous agreements with those represented, never on their own.
In some countries, such as Spain, there are initiatives such as the one implemented by the Ministry of Industry, Commerce and Tourism, through the General Directorate of Industry and Small and Medium Enterprises, through which the objective is to help with the march of viable companies at risk of disappearing due to problems other than economic ones to avoid the sale or advice if it is unavoidable.
In our country it is common that intermediaries are required to carry out this transaction successfully, these intermediaries can be used, a scrutiny of competitors, contacted an interested party or businessman but this transaction takes time, because by doing it in less time it runs the risk of not receiving the adequate amount.
Improving the company can be an option when wanting to increase its value, thinking like the buyer is a very obvious but very common option, a buyer usually pays attention to the following aspects:
- A fair and supported commercial valuation, carried out by a company and a certified expert for its valuation, who obtains an accurate and clear analysis of the factors on which they were based to conclude a final value.
- Financing tools for the company, from equity swaps to supplier financing.
- Factors that put the company at risk, in any investment, these factors must be examined before the purchase, the conditions of the industry, the market, the economic situation of the country where it is marketed, growth potential, liabilities and assets, debts, credits, etc.
- To find a buyer, the traditional thing is to spread the word within the industry circle, with acquaintances, suppliers and partners. You can also ask for the collaboration of advisors such as accountants and lawyers, who have knowledge of who might be interested in acquiring the business. acting as intermediaries.
Some of the options for announcing the sale of the company
- Ads in local media, the public is massive
- Local Chamber of Commerce, through its network, can help with sales and obtaining potential buyers.
- Known as business partners, competitors and buyers, it can be the largest network and advertising with a very good reach.
- investment bank
- Online listing website, here we can screen and select potential buyers
Why sell my company?
There are various reasons for selling your company, from circumstances that the entrepreneur is going through to various factors that the market where the company is going through, one of the most common reasons are:
Liquidity: Well, when selling the company, a monetary amount is received that many times they use to invest in another business or company.
Uncertainty: Not having a good structure, administration, personnel or conflicts between partners triggers distrust for the future and the decision is made to sell it.
Strategy or convenience: Due to growth, expansion or strategic alliances, you can opt for the option to sell shares and have new partners.
Investment or capital need: The same company may be going through a period of low profits and need for cash flows, for which reason the put option is considered if it does not have the necessary resources or does not want to invest its own capital.
Successors: There is a possibility in some businesses that the first generation creates it, the second makes it grow and the time comes when the generations and the owners change and along with it the management, administration and structure, which is why it no longer provides the necessary results. same fruits and opens the possibility of sale or transfer of the company.
Conflict between partners: We know that the head of the company are the owners and many times personal problems affect the proper functioning of the business, so when such conflicts appear, the best thing is the sale by one or both of the parties.
Technology: Technology evolves day by day and business with it, there are times when these, by not evolving along with the technology, become obsolete and investment in said technology is necessary to cover the market share and obtain profitability, since it is not willing to this investment the sale is considered to new owners with said resources or to a larger company.
What is the sale of shares?
This type of transaction is much more common and in many cases more convenient in multinational companies, since it involves the sale of a percentage of the company for an established amount of money that is paid to each shareholder of the company for which, the buyer assumes all responsibility and risk that being part of the company entails.
Generally, income from the sale of shares is not subject to tax, except when the shares are acquired with the purpose of being sold in the short term.
When concluding with the sale of shares, there is the advantage that the business does not change ownership, the relationship with employees is not affected and the business continues with its daily activities, in addition to the fact that the capital obtained benefits each one of them. shareholder members of the company.
We mention some advantages and disadvantages from the point of view of the seller and the buyer regarding the option to buy and sell shares:
Advantages
Seller:
- You do not lose the business in its entirety.
- It has the option to repurchase its shares in the future, if this was the initial agreement and both parties agree.
Buyer:
- You can be part of the shareholders' council depending on your percentage of participation.
- Return on investment with the profitability of the company.
Disadvantages
Seller:
- You have to consult and vote on decisions about the direction of the company with the council or board of directors.
- It is mandatory to be listed on the stock market and this is very volatile.
Buyer:
- The value of those shares may also decline.
- Taking on responsibilities often also brings with it legal actions, scandals, debts, etc.
What do I need to sell my company?
After confirming that the requirements for the sale or transfer of the company are met and analyzing the pros and cons with the help of all the previous information, it is necessary to consider that a professional in the matter will be in charge of preparing a purchase and sale contract. company, depending on who the owner is, since it may be a physical or legal person and in which the respective transfer of shares and an inventory of the elements transmitted in this sale must be established, as well as invoices or receipts to prove the ownership of the goods.
At the end of the signatures, a copy of this must be printed for each party involved (buyer and seller) or the parties involved in the case of a sale of shares, and finally, if the company belongs to a legal or legal entity, it is necessary to formalize said contract by means of a public deed, which refers to delivering it with a notary or public broker and making a registration with the Ministry of Economy regarding the sale.
How does a going concern appraisal work to sell my business?
First, let's understand that a going concern refers to a company that is currently operating and can be seen to have the potential to operate in the future, this unit generates monetary benefits and no future threats are foreseen for this business.
A going concern appraisal It is a study in which tangible and intangible fixed assets will be considered such as:
Tangibles
- furniture and equipment
- Computer equipment
- Machinery and equipment
- Estate
- Mineral deposits, etc.
Intangibles
- Brands and trade names
- patents
- goodwill
- Customer lists and business relationships
- Franchise
- computer software
And they are analyzed to know the value of each one of them since the business is visualized as a whole made up of said assets.
In this type of appraisal, both economic factors of the business environment must be taken into account, as well as the financial one in which it is carried out, for which reason this study provides the businessman with a concise idea of his financial situation, which allows measuring the profitability and liquidity of the business.
Commented on the above, the study of going concern valuation It is the main tool for the sale of your company, since as we mentioned in previous points, knowing the real value of your business based on specific and verifiable data will be what motivates the purchase and can support the price at which it is offered.
Tips to sell my company
- Planning the exit of the company one or two years in advance will help put the company in optimal conditions for sale, improve sales so that the value is higher, have the necessary financial records, customer and personnel database, etc
- Getting a business broker ensures maximum value for the business.
- Qualify potential buyers, thus having the opportunity to analyze whether the business will be safe or not, since many buyers make the deal but are waiting for a loan and when they do not obtain it, the sale falls apart, analyzing each of the possible buyers we can rule out those that are accurate and those that are not.
- Have a succession plan, if the personnel template will be transferred, the seller can prepare in advance a person from the organization or its area heads with complementary training that proves the operation of each area and thus can advise the new owners on the operation of the company.
- Increase in the value of the company before the sale, with an action plan to increase the value of the assets, sales and profits or the improvement of facilities, staff training, increased production, etc.
Useful pages if you are in the process of selling your company
Valuation of ongoing businesses, companies, real estate, guaranteed and supported by expert appraisal experts.
On this platform you can find businesses for sale by filtering according to geographic location, budget and sector.
- Business & Assets: https://business-asset.com/mx/venta-traspaso-negocios/
Platform to announce or search for the transfer of a company according to the city or country where you require it and the business, without the need for intermediaries.
- Oaklins Member Firm Zimma: https://zimma.com.mx/asesoria-en-venta-de-empresas-mexico/
Advice for the sale of your company.
To learn more about the valuation of companies consult our blog or contact to one of our advisers and solve all your doubts.
