Here we compile everything you need to know and consider about selling a company that is important from an entrepreneur’s point of view. The site is continuously expanded and updated.
What needs to be taken into account? Which mistakes should be avoided? What affects the price? When and in what ways does it make sense to seek support from an M&A consultant? What does this cost? Where can I get further information? You can find all this and much more here.
Are you already thinking about selling your company but aren’t sure what your next steps might be? Take advantage of our offer and talk to us free of charge, confidentially and without obligation about what an optimal sales strategy and buyer search could look like. We have many years of experience, can inform you about options for action and, if necessary, will be happy to connect you with the most suitable consultant from our international network. Depending on your needs, you can receive support for the entire sales process or just for a part of it.
Related topics : Use our current online company valuation for a valuation based on current market data and individual value drivers. In addition, we publish the current valuation multiples for numerous countries, industries and company sizes every month. On our website you will also find a detailed description of the most common company valuation methods .
Selling a company: something to consider
The time factor
Avoid a hasty transaction. Plan and prepare the sales process well in advance.
Time pressure when selling a company leads to unsatisfactory results and, in the worst case, can even mean the closure of the company if no buyer can be found. Depending on the type of handover, the time from initial contact to the actual handover varies. On average, a succession within the family takes 6.5 years, an internal company handover takes 3.3 years and an external company handover takes 1.6 years. Depending on the size of the company and the complexity of the transaction, it can be quicker or take longer.
Sell the company itself
How much experience do you have in the area of corporate sales? Selling your own business is most likely a one-off affair, a situation you have never been in before and for which you have no experience or expertise. Mistakes can cost you dearly, and not just financially. There are also tax and legal aspects that need to be considered.
How much time can you spare? As a company owner, you are usually already fully occupied with your day-to-day business. There is no time to prepare and carry out the demanding and time-consuming sales process, which can drag on for several months or even years and can suddenly become intensive at any time. Neglecting day-to-day business during this time can cause significant damage to the company, its value and its saleability.
How great is the need for discretion? An external consultant can search for potential buyers and clarify their interests without having to immediately reveal the identity of the seller. Who is a potential buyer? The greater the benefit for the buyer, the higher the achievable purchase price will be. Finding this buyer is not always easy. A well-connected consultant is therefore worth its weight in gold and can lead to a significantly higher sales price.
As an absolute minimum, the purchase agreement should be reviewed by an experienced attorney unless you are an expert in commercial contracts. For companies of a certain size (roughly EUR 1 million or more in sales), the benefits of comprehensive consulting, i.e. the increase in value through optimal process management, increasing sales opportunities and minimizing risks, are well balanced against the costs of a consultant. For smaller companies, it may make sense to agree on leaner consulting models, for example coaching on specific topics on an hourly basis.
The tax aspects of the transaction should also be assessed and optimized in advance by an expert.
Forms of company succession
A company sale can be within the family, within the company or outside the company.
Roughly speaking, there are three forms of succession:
When selling to a family member, we see discounts of 30% or more from the market price. Even with an internal company succession plan, the price is usually below the market price. An average of 10-20 percent is usual here.
The 7 typical steps of a successful company sale
From the first thoughts about selling a company to the closing (final transfer of ownership in a defined manner), numerous steps have to be completed.
1. Preparation – The most important questions to ask at the beginning:
2. Determine the company value and prepare sales documentation:
Company valuation and sales documentation are each based on two pillars. On the one hand, on the financial figures – past, present and forecast future ones – and on the other hand, on numerous qualitative factors such as strategy, management, organization, but also the product, market, supplier and customer structure. This is how the current status of the company is determined. The goal is a company evaluation and a realistic company presentation in an exposé (also called information memorandum), which truthfully depicts the company and also highlights its strengths and potential. This exposé serves as information for serious prospective buyers who have previously signed a confidentiality agreement and is the basis for the sales negotiations. The better the documentation anticipates the questions of potential buyers, the more efficient and resource-saving the buyer search is.
To address potential buyers, an anonymized summary, a so-called “blind profile” (also called a teaser), is written. It should contain enough information to arouse the interest of potential buyers without revealing the identity of the company.
3 . Optimization: Are the numbers not so good at the moment?
Then it is important to be able to credibly demonstrate why this is the case and that the current figures do not reflect the “true” profitability and potential of the company. Whenever possible, initiate positive changes yourself so that an upward trend is visible.
In addition, there may be means and measures that can be used to improve the figures in the short term, for example by reducing costs.
4. Finding a buyer – Who could be a potential buyer for my company?
A financial investor, a strategic investor or a private investor? Is there a potential buyer within your management or within the family? Does it make sense to address a broad audience or is it better to address specific individuals?
Financial investors, such as private equity funds or family offices, primarily look at profits and sufficient cash flow to finance debt.
Private equity funds are usually only invested for a certain period of time (3-7 years). They achieve their added value through a high level of debt capital, an increase in company value and a profitable resale. The financing costs must be borne by the purchased company, which means it also bears the risk. Family offices usually have a longer time horizon but similar return expectations. Most family offices focus on diversifying their assets and prefer to invest in innovation and growth sectors.
Strategic investors are usually long-term investors and can be competitors, customers, suppliers or business partners who want to strengthen their own business model through a company acquisition along the value chain or in related or complementary areas. This can be achieved, for example, through the acquisition of know-how (e.g. processes and patents), regional business expansion, the synergistic use of economies of scale and scope or through access to new customer groups. In addition, strategic investors also invest in new business areas to offset fluctuations or declines in the traditional core business. Buying a company with high sales (and little profit) can also make sense in order to improve your cost structure. For this reason, NIMBO takes into account not only profit but also sales in its analysis.
When sold to a strategic investor or a financial investor, the selling price tends to be higher than the determined value.
If you only want to sell company shares, it should be noted that a strategic investor will be more involved in the business than a financial investor.
A family or loyalty discount is usually available for succession within the family or company. This means that in both cases the selling price remains below the theoretical company value.
In consultation with the seller, the consultant discreetly searches for potential buyers, either based on a specific suggestion from the seller (e.g. from competitors), in his own network or through research into potential interested parties.
The approach will only be made with the express consent of the seller. Generally, the identity of the seller is not disclosed at this stage. If there is interest, the potential buyer will find out who the buyer is after signing a confidentiality agreement and will be given the detailed exposé. If the consultant is well connected in both the industry and the region in question, this increases the chances of a successful sale.
5. Review and selection of prospective buyers
Ideally, you have several interested parties at the same negotiation stage in the process. This improves the negotiating position and thus the probability of achieving a higher price and finding the optimal buyer who carries on the owner’s philosophy.
After the prospective buyer has had time to look through the detailed exposé (information memorandum), a meeting is arranged to get to know each other. Depending on the request, the consultant may participate in this meeting or take an active role, for example by moderating the conversation.
Once the management meetings with all interested parties have been completed, the next step is to request a non-binding purchase offer. If you receive several offers, the worst ones are eliminated and only the best ones move on to the next round.
Sales often fail due to financing. It is important to check in good time whether the potential buyer has the necessary financial resources available or will receive appropriate financing.
6. Negotiations and due diligence
The negotiation process is influenced by economic but also tactical factors, as both sides try to achieve the most favorable result for themselves. This should not stop the process.
Situational discussion has nothing to do with professional negotiation tactics. It is important that your own specific interests, expectations and fears and those of your negotiating partner are clearly defined. A consultant can contribute a lot as a mediator to laying the foundation for a constructive discussion.
The most common reasons that lead to negotiations failing are different ideas regarding price, warranties and assumption of risks. Creativity and openness towards alternative transaction models are important. For example, deferred payments that depend on the company’s future development can be a means of building a bridge between different price expectations. The role of a consultant is to bring appropriate ideas into the negotiations.
If so-called deal breakers only appear late in the negotiation process, this is particularly annoying for everyone involved, as a lot of time and money has already been invested. Deal breakers can arise for understandable economic or legal reasons, but they can also arise from a misunderstanding.
This is where the consultant plays an important role. On the one hand, by addressing possible critical points in advance and putting them up for discussion, and on the other hand, by listening carefully during negotiations to ensure that both parties say and mean the same thing.
If things get concrete, the consultant draws up a preliminary contract and supports a due diligence (company audit) by setting up a data room and advising the entrepreneur on the selection of documents to be stored there. If the due diligence is satisfactory and agreement has been reached on all points, the buyer makes a binding offer that forms the basis for the purchase contract.
7. Conclusion of contract
There is a need for clarification and design in financial, business, legal and tax terms. The consultant knows when and for what a specialist is needed.
The purchase contract should be drawn up by a lawyer.
If shares are transferred, notarial certification is required by law in many countries (not in Switzerland).
Normally each party bears its own consultancy and legal fees. If a notary is required, these costs are generally shared.
The due diligence examination of the company in depth
After submitting a non-binding offer, serious prospective buyers usually subject the company for sale to a careful examination to ensure that all information and data that are ultimately relevant to the purchase price have been correctly presented by the seller.
In the past, files and papers were examined in one room; today, the relevant documents are usually uploaded to a virtual data room with a password and can be viewed there via the Internet. The effort required is always related to the size and complexity of a company.
Due Diligence Checklist: What is it about and what do I need to provide?
Traditionally, the exam focuses on three areas:
Finance and taxes
This essentially concerns (without claiming to be complete)
Legal matters
This is about
And if applicable, the technical and organizational area
This is about
Additionally, the areas
Is the buyer a good fit for my company?
Critical factors can be leadership style, decision-making processes, communication, transparency and possible integration into an existing, possibly larger organization. If there are disagreements, top performers often leave the company after a short time. This can lead to massive drops in productivity and a deterioration in results.
If possible, management or key personnel should be involved in the sales process. If you succeed in creating a sense of togetherness with the new owner, your employees will remain motivated, focused and supportive.
External company sale or sale of shares within the family or company
An external company sale can be made to a private investor who will also manage the company operationally, to a financial investor or to a strategic investor.
A private investor who has both the financial and professional background to take over and run the company will usually continue to run the company in a similar way as before.
Selling to a financially strong investor can significantly increase the company’s growth if it makes business sense. If it is possible to set up a bidding process with several interested parties who are not only interested in the company itself but also in the resulting synergy effects, a price above the value is usually achieved. When selling to a competitor, there are two options: a foreign company wants to enter the market or a local competitor wants to buy market share.
There are three different variants of succession within the family: a gift (anticipated inheritance), a transfer in return for recurring payments (pensions, dividends, etc.) or a purchase. When selling to a family member, we see discounts of an average of 30% off the market price.
Is there a manager or management team in the company that you trust to take on the role of responsible entrepreneur? Provided that the company is in a good enough financial position so that the purchase price can be financed from cash flow, this type of company handover represents stability and the continuation of business as before. If the buyer(s) do not have sufficient equity, a loan from the entrepreneur may be a solution. We observe a price reduction of 10-20% for internal company transfers.
Tax assessment in the case of transfer within the family or company
The tax office is increasingly questioning the purchase price when a company is sold within the family or between a company member and the shareholder.
The Valuation Act (BewG) specifies how a company valuation for tax purposes is to be carried out. This primarily concerns the collection of gift and inheritance taxes.
In Germany, when assessing a company for tax purposes, only the figures for the last three financial years are considered; future profitability is not taken into account. For small and medium-sized enterprises, the tax valuation is usually significantly higher than the sales prices achievable on the market. The tax office assumes an EBIT of around nine times. If the family member or manager pays a lower purchase price, gift tax is due on the difference. However, the buyer has the right to prove that the valuation does not reflect the market value and thus reduce his tax burden.
A professional assessment according to the standard of the Institute of Public Auditors (IDW S1) is recommended here. However, the company valuation must be prepared before the transaction.
INFLUENCES ON THE SELLING PRICE
What is the best starting point to achieve a high price?
- Someone actively approaches you and makes you an offer.
Since someone here is already very interested in your company, you have a comfortable negotiating position and a good chance of achieving a price that is (significantly) above value, especially if you are not in a hurry to sell. A company rating gives you an indication. - They systematically consider who could be a potential buyer, approach everyone at the same time and then conduct negotiations with all interested parties in parallel. Competition stimulates business and drives up the price.
Is the company value identical to the sales price?
The company value is not the price, but a basis for pricing. The price is determined by supply and demand as well as negotiations. Parameters in the negotiations include, for example, the transaction structure, guarantees and warranties.
The seller wants to get the maximum price for his company, the buyer wants to pay as little as possible. The purchase price should be fair for both parties. The purchase price should be able to be paid off after 5-8 years.
Typical sales conditions
Under what circumstances is a buyer willing to pay a higher price?
When is the seller likely to be willing to reduce the price?
Selling companies with consultant support
What is his job and what added value does an M&A consultant offer?
M & A consultants (M & A = Mergers and Acquisitions) ensure process reliability. This helps to avoid expensive and time-consuming mistakes.
The consultant has an outside view of things, is neutral, objective and free of hindering emotions.
He knows the sequence of necessary steps, is focused on the essentials and sets up a structured process. In consultation with the seller, a project plan with milestones is created.
A consultant who is well connected both in the industry and in the respective region ensures that the circle of buyers is large enough and thus increases the chances of a successful sale.
Discretion is essential. If the intention to sell becomes public too early, this can have very negative effects on the company, be it through employees quitting or unsettled customers or suppliers. A consultant acts as an intermediary and offers discretion. He also knows when, to whom, what information should be disclosed and in which situations caution is required.
Due to his experience in M&A transactions, a good advisor recognizes dubious and financially weak purchase candidates at an early stage and can exclude them from the process. This saves time and prevents indiscretion.
In negotiations, the consultant knows the usual rules but also the stumbling blocks and can introduce new ideas. He can address possible critical points in advance. By listening carefully during negotiations, he can avoid misunderstandings which, in the worst case, could lead to the negotiations being broken off.
There are two types of consultants. There are consultants who accompany the entire sales process from preparation, through the search for buyers, to the conclusion of the contract, including coordination with lawyers and tax advisors. The other group is comparable to a real estate agent. Here the service is limited to the search for potential buyers in the role of an intermediary/broker. For small businesses, this option may be sufficient and is usually only associated with performance-related costs.
What can’t a consultant do?
The consultant can take a lot of work off the company owner’s hands in order to keep the time burden as low as possible. Nevertheless, there will still be a lot of work for the owner to do. Especially at the beginning, the consultant is dependent on the cooperation of his client in order to collect all the information necessary for the sales process and to gain a deeper understanding of the company. The necessary time resources for personal meetings with potential buyers and their preparation must also be planned.
Engaging a consultant is no guarantee that the company will be sold. There are companies that are actually not for sale. In Germany, about a quarter of companies ready for handover cannot be sold and are closed down. The main reasons for failure were: company too small, poor profitability, investment backlog, lack of competitiveness and future viability.
How much does an M&A consultant cost?
A reputable consultant will get an overview of your company free of charge and without obligation and will work with you to develop your goals, sales strategy and needs. If he estimates the probability of success to be high under the given conditions (for example, your price expectations), he will then make you a written offer.
If you commission the consultant to handle the entire sales process, including preparation, buyer search, negotiations, etc., the fee model usually consists of a fixed and a success-related component. A few consultants work exclusively on a performance-related basis. Advantage for the customer: Costs are only incurred if the transaction is successful. Disadvantage: The consultant is under massive pressure to succeed; he will try to complete the sale as quickly as possible, regardless of whether it is the best achievable price.
Fixed consulting costs (basic costs, retainer)
A sales process usually takes 6-12 months, but can also take several years and requires a lot of work from the consultant, especially at the beginning. The fixed part of the fee is primarily intended to ensure the seriousness of the intention to sell and to cover at least part of the consultant’s costs in the event that the customer changes his mind in the middle of the process and no longer wants to sell. This can be in the form of a one-off payment at the beginning, payments upon reaching certain milestones (e.g. completion of documentation, first meeting with the counterparty, etc.) or defined as a monthly amount (the so-called retainer). There are different models for monthly payments. They can be charged only for the first 3-6 months or for the entire duration of the sales process. Some, few consultants, do not include a fixed component during the entire sales process. In this case, the performance-related component is higher. In the event of success, offsetting the fixed cost share against the success fee is a fair solution for both sides.
If a flat fee is agreed, its amount depends on the expected workload of the consultant (especially for company documentation). For smaller companies with expected transaction values in the range of EUR 1 to 5 million, they typically amount to a total of EUR 5,000 to 20,000, with monthly payments in the range of EUR 1,000 to 4,000.
Success-related consulting costs
Consultants mainly work on a contingency basis, meaning they receive a percentage of the transaction value. The lower the expected sales price, the higher this percentage, since the amount of work depends only to a limited extent on the transaction volume, but more on the complexity of the transaction. An additional determining factor for the amount of compensation is the saleability of the company and the estimated time the process will take. Consultants with a lot of experience and a good network in the respective industry can justify a higher percentage, as the sales opportunities and possibly also the quality of the potential buyers are significantly increased by their expertise.
Below you will find a rough indication of the usual success-related components for a consultant who accompanies the company owner comprehensively, intensively and throughout the entire sales process, including active and systematic buyer search. These are to be understood in combination with a fixed, non-performance-related component.
Usual consultant commission in % of the sales price – varies according to industry and company size
< 1 million €: 5 – 10%
1 – 3 million €: 4 – 7%
3 – 10 million €: 3 – 6%
> 10 million €: 1 – 3%
A minimum fee can be agreed upon.
If the consultant only acts as an agent/broker and does not otherwise accompany the sales process, he or she also receives a commission, but the percentage is lower.
If you do not want to entrust the consultant with the entire sales process, but only want help in certain areas, such as preparing the exposé, you will be charged an hourly fee / daily rate. Typical daily rates range between €1,000 and €2,000, although the amount does not say anything about the consultant’s efficiency and you may end up with a lower total bill if you choose a more expensive but more experienced consultant.
Four examples of different fee models
There is no uniform fee structure for a sales process, and in practice there are a multitude of billing models in countless variations.
To give you an idea, some common models are explained below as examples.
| Fee model | Description | The invoice | fee |
| Success fee | The consultant works exclusively on a success basis. His success fee is 5% of the sales amount. If the sale does not take place, the consultant receives nothing. (There are consultants who cover this risk with an “exit fee”) | Total transaction amount: 2 million € Success fee: €100,000 (5% of 2 million sales price) | 100.000 € (plus VAT) |
| Basic and Success fee | Basic fee: Upon conclusion of the contract, the consultant will invoice a basic fee of €2,400 (plus VAT) for the consulting concept, research work and the creation of a blind profile and a company presentation. The first installment of €1,800 (plus VAT) is due immediately upon signing, the second installment of €600 (plus VAT) upon receipt of a Non-Disclosure Agreement (NDA) from an interested party. Success fee: €900 (plus VAT) will be charged for the first visit of a prospective buyer. A maximum of 3 visits will be charged, all further visits are free of charge. Visits are only initiated with the consent of the client. If a prospective buyer submits a signed letter of intent, the consultant will charge €1,800 (plus VAT). In this case, the consultant will charge a staggered success fee of 5% for the first million €, plus 4% for the second million €, plus 3% for everything over €2,000,001 but at least €25,000 plus VAT in the case of a company sale. A fee of 1.5% is charged for the assumption of loans or liabilities. Loan amount: €100,000 The fee already paid is deducted from the success fee for the transaction value, e.g. 2 visits totaling €1,800 + a “Letter of Intent” €1,800 = €3,600 | Total transaction amount: 2 million € Basic fee: 2400€ plus 1,500 € (1.5% of 100,000€ loan) plus 50,000 € (5% of €1 million) plus 36,000 € (4% of 900,000€) less 1800 € (Payment for 2 visits if possible. Buyers) less 1800 € (Payment for a LoI) | 86,300€ (plus VAT) |
| Monthly payment plus Success fee | Basic fee: From the time the contract is concluded, the consultant receives a fixed monthly payment of €4,000 (plus VAT) for the entire duration of the contract (either until the contract is terminated or until the company is sold). Transaction duration in this example: 12 months Success fee: The consultant receives 5% of the transaction value (purchase price). A fee of 1.5% is charged for the assumption of loans or liabilities. | Total transaction amount: 2 million € Basic fee: 48,000€ (12 months x 4000€) plus 95,000€ (5% of €1.9 million) plus 1500 € (1.5% of €100,000 loan) | 144.500€ (plus VAT) |
| Hourly fee based on effort, creditable to Success fee | Basic fee : The consultant charges an hourly fee of 150 €. Estimated number of hours for an easily sellable company: – Documentation, preparation of figures and research: 50 hours – Buyer approach: 50 hours – Meetings and negotiations: 30 hours – Contract conclusion and follow-up: 10 hours Success fee : The advisor charges 5% of the transaction value (purchase price). In case of success, the basic fee will be credited towards the success fee. | Total transaction amount: 2 million € Basic fee: €21,000 (Total remuneration based on effort: 140 hours at 150 €) plus 100,000 € (5% of 2 million) less 21,000 € (Hours spent will be credited towards the success fee) | 79.000 € (plus VAT) |
Sell an online SHOP
Depending on the level of sales and profit, four categories of buyers can be considered as buyers for an online shop:
- Private buyers, employees: tend to buy small shops, as financing options are usually limited.
- Competitors: Direct competitors only buy in exceptional cases, for example to increase market share. Buyers from related industries are more likely to be considered.
- E-commerce specialists: If the products or brand fit their portfolio and they see development opportunities
- Investors, private equity companies: have certain return expectations and value growth prospects and scalability. With an optimal fit, a price significantly above market value can be achieved.
SELLING A COMPANY THROUGH AN ADVERTISEMENT IN A COMPANY EXCHANGE
Especially for sellers or potential buyers of smaller companies, an advertisement on a relevant platform or a so-called company exchange can be a way to draw attention to yourself. There you will find companies that are advertised for takeover as well as the opportunity to offer your own company for takeover. Some platforms have a regional focus or specialize in certain industries.
An advertisement can be useful for both sides: on the seller side, for small companies with a turnover of less than one million who want to find a successor in the medium term or who want to get an overview of the succession market. On the buyer side, for talented young people who are faced with the decision of starting their own business or continuing to run an established company, or for employees for whom self-employment might be an option.
The costs of using a company exchange vary greatly. Therefore, the small print should be read carefully. The spectrum ranges from free and paid advertisements and additional consulting packages, to monthly fees with and without a minimum term, to a fixed amount or a percentage success commission if a transaction is concluded via the advertisement.
In addition to differences in costs, there are also differences in the quality of the platforms. Please note that quality assurance is carried out and your data and profile entry is checked before activation.
Country-specific information for Germany , Switzerland , Austria and the UK can be found here.
Possible problems
If the price is set unrealistically high, your ad will not be successful. In the UK, for precisely this reason, only 5% of companies offered on a company exchange appear to actually be sold.
Depending on the situation, it is difficult to maintain anonymity. If you reveal too little about yourself, you won’t attract any interested parties. If the intention to sell becomes public, it can have negative effects on the company. Interested parties should be asked to sign a confidentiality agreement, also to prevent internal information from falling into the wrong hands.
It can happen that your advert attracts sightseers who simply like to visit companies but have no intention of buying the company.
Fraudsters are also active here. Suspicion is appropriate if the buyer wants to buy the company sight unseen, accepts any price, proposes foreign exchange transactions or wants to conduct the transaction abroad.
Business succession in Germany
In 2020 and 2021, many medium-sized companies have had to fight primarily for survival. Any future or handover plans have been forced to pause during this time. A much more positive picture is emerging for 2022: By the end of the year, around 230,000 companies are seeking a succession solution. Despite greater optimism on the part of entrepreneurs, the structural succession gap, caused on the one hand by low birth rates and on the other hand by low interest in self-employment, makes the search for a suitable successor more difficult.
Initiatives have been created to bring together those willing to hand over and those willing to take over. One example is the RKW Competence Center , which has launched numerous model projects .
The Chambers of Commerce and Industry offer information, advice and support to around 30,000 entrepreneurs every year, i.e. both entrepreneurs who are looking for a successor and future entrepreneurs. ATTENTION: Link is not working at the moment due to a cyberattack on the IHK! The Kreditanstalt für Wiederaufbau offers numerous funding opportunities for future entrepreneurs and has also published a checklist for successors.
Check tax aspects of the company sale before the transaction
The tax aspects of the transaction should be assessed and optimized in advance by a specialist. If you do not already have a suitable tax advisor, you can find tax advisors with the additional qualification “Specialist advisor for company succession” in your region on the website steuerberater.de . Enter your postcode and select “Business Succession” under Specialist Advisor. Mistakes or omissions can cost you dearly.
Sale of company – tax allowance for the entrepreneur 55+
A sole proprietor may be entitled to an age allowance when selling his business. If the entrepreneur is at least 55 years old, the capital gains remain tax-free up to €45,000 upon request. The allowance can only be applied for once. The upper limit for the full tax-free allowance is €136,000 in capital gains. To qualify for the tax allowance, you do NOT have to own 100 percent of the company.
Sell GmbH or sell GmbH shares
Do you hold shares in a GmbH and would like to sell them? Unless otherwise provided in the partnership agreement, the shares can be sold to another partner or to an external person. If the shareholders’ agreement contains a right of pre-emption for the shareholders, this must be observed. It must also be checked whether the consent of the shareholders to the share sale and to the buyer is mandatory in order to be able to sell GmbH shares. The transfer must be notarized and the commercial register entry must be changed. When drawing up the purchase contract, it is advisable to seek the support of a specialist lawyer in order to avoid liability risks or economic disadvantages for the seller.
Taxes due when selling shares
- If you have a small shareholding of less than one percent within the last five years, a one-off capital gains tax of 25% (or, upon request, the personal tax rate of less than 25%) is payable on the sales profit, plus a 5.5% solidarity surcharge and, if applicable, at least 8% church tax.
- If the share in the company has been more than one percent over the last five years, the so-called partial income method comes into effect. Only 60% of the total profit is taxed according to the personal tax rate, 40% remains tax-free. According to Section 17 Paragraph 3, there is a proportional tax allowance (€9,060 for a 100% share), which reduces the amount of the taxable (= 60% share) total profit. There is no trade tax.
- If a corporation sells GmbH shares, according to a special provision of the Corporate Tax Act, only 5 percent of the sales profit is taxed as a non-deductible business expense if the company shareholding is at least 15 percent. In addition, trade and corporate taxes are due.
Company exchanges in Germany
Here you will find general information about advertisements on a company exchange and their advantages and disadvantages.
In Germany, there are numerous company exchanges where you can post an offer to sell or a request to buy. The largest, nexxt-change , is supported by the Federal Ministry for Economic Affairs and Energy and KfW. Their 730 regional partners offer free support and can help you, for example, with formulating the advertisement and assist you in pre-selecting suitable interested parties. You can also advertise here if you are resident in Germany but your company is located abroad, or if you are a prospective buyer residing abroad.
This list gives you a good overview of the most important German company exchanges .
Selling a company in Switzerland
Here you will find Switzerland-specific knowledge. Link to general information on selling a company
SMEs are the economic backbone of Switzerland. In the category with up to 100 employees – these are the companies that use the NIMBO company valuation most often – there were around 590,000 companies in Switzerland in 2018. The majority of these are family owned.
Business succession should be planned for the long term and approached in a structured manner, especially if the company represents the entrepreneur’s retirement provision. Financial planning for entrepreneurs is complex. Private pension provision and wealth creation are often neglected. It is also strongly recommended that, in the event of a sudden death, appropriate marriage and inheritance contracts be concluded as a precautionary measure in order to ensure the continued existence of the company and to find an individually suitable solution. 30 percent of the companies awaiting succession cannot be handed over and are ultimately closed down, partly because the owner does not take care of his succession or does so too late. Sole proprietorships in particular have greater problems with succession, as those interested in a small business are more likely to start a new one than take it over. This not only has economic consequences for the owner, but also for numerous employees.
Tax optimization before the sale
Disentangle private and company finances : if the owner pays himself only a low salary and/or a low dividend for years for tax reasons, large amounts of non-operational liquid assets can accumulate in the company. When a sale is made, the buyer must pay for them through a higher purchase price. This situation is disadvantageous for him, as he can only distribute them at a loss in the first five years, as they would be considered an indirect partial liquidation and taxed accordingly.
Tip: Pay out liquidity that is not required for operations as special dividends before the sale. The tax burden can also be reduced by paying into the pension fund, but at least three years must elapse between the purchase into the pension fund and the subsequent withdrawal of capital.
Transfer non-operational properties into private ownership
Company real estate whose value is comparatively high in relation to the company value should also be separated from the company assets, e.g. by selling it to the company owner.
Division of the company
If the company is active in more than one core business, it may be advisable to split the company and sell the parts individually.
Family-internal company succession
Tip: The University of St. Gallen regularly offers continuing education seminars on the topic of family businesses and succession specifically for family businesses at.
Pricing for transfer within the family
For every succession plan, the company must be valued and a price set. In order to avoid future conflicts, it is advisable to seek out an independent specialist for this task. A 2016 survey by Credit Suisse found that the price for family members or friends is lower than for an external succession. Both groups receive an average discount of 41% of the market price. 18% of the family-internal successors even received the company “for free”, e.g. via inheritance or donation.
Cantonal differences in gift tax
The recipient is liable to pay gift tax. Spouses and children are exempt from taxes in most cantons. Exception: in the cantons AI, GR, JU and VD there are tax allowances.
Cohabiting partners are not treated equally to married couples. They are taxed in the highest tax bracket; the exceptions are the cantons of OW, Schwyz and Zug.
Tax optimization for intra-family transfers in Switzerland
Many Swiss family businesses have too much liquidity that cannot be transferred to the entrepreneur’s private assets without incurring significant tax payments.
One solution is to set up an inheritance or acquisition holding company, which reduces the seller’s tax burden and thus enables succession at an affordable price. In such a case, it is advisable to obtain a so-called tax ruling from the responsible tax authority, a binding legal analysis obtained in advance.
The newly founded stock corporation (the holding company) takes over the family business. The company raises external capital for the takeover. The holding company receives dividend payments from the subsidiary, which it uses to repay the borrowed capital. The advantage is that the repayment of the loan can be linked to the course of business. When drafting the contract, various models are conceivable, depending on who the external capital comes from. For example, the previous owner could retain the majority of shares until half of the loan has been repaid by the holding company.
Sale of shares from private assets
An important question is whether a sale of shares from private assets provides a tax-free
represents capital gain. This depends on various factors at the seller,
but also depends on whether the buyer makes distributions that are to be considered as withdrawals of assets within five years following the purchase. If this "substance" was already present before the purchase, was distributable under commercial law and not necessary for operations, and the seller knew that funds were being withdrawn from the company for financing purposes, the sale is taxable.
Whether these circumstances that trigger a tax liability are actually met in individual cases should be examined by a tax expert. Depending on the complexity of the transaction, it is also strongly recommended to obtain a legally binding commitment from the tax office.
Company exchanges in Switzerland
Here you will find general information about advertisements on a company exchange and their advantages and disadvantages.
Especially for sellers or potential buyers of smaller companies, an advertisement on a company exchange can be a way to draw attention to themselves. There you will find companies that are advertised for takeover as well as the opportunity to offer your own company for takeover. The larger company exchanges in Switzerland that have been in existence for a long time include Companymarket and firmforsale .
Financing and funding
Economic development for SMEs in Switzerland is generally organized at the cantonal level. On this page of the Department of Economic Affairs, Education and Research you will find useful links on the subject of economic development in your region. There is also information about regional funding institutions that can provide support to a company in the start-up phase in addition to the banks. But there are also numerous funding instruments at the federal level.
Company transfers in Austria
Would you like to sell your company or take over a company? We have compiled a range of information and useful links for you. Due to demographic change, around 6,500 age-related company transfers per year are expected in Austria in the next few years. The proportion of intra-family transfers has steadily declined over the last decade and is currently stable at around 50%. The other half of the companies are sold to employees or to external parties.
Sell a company, buy a company
The Chamber of Commerce’s information brochure provides a very good initial overview for transferors or acquirers of an Austrian company.
Important: Every case is unique! Much depends on various factors and there are no general answers. It concerns legal issues, particularly tax issues, administrative and business management issues, as well as issues of financing. If in doubt, seek professional support.
There is a lot to consider and mistakes should be avoided wherever possible.
Help with tax law questions
The KSW, the Chamber of Tax Consultants and Auditors, offers a free initial consultation. Information about the KSW offer including links to the regional office responsible for you.
Other legal issues
If you do not have a notary you trust, the platform of the Austrian Notaries Association is useful for you. You can find a lawyer in your region and with the desired specialization on the website of the Austrian Bar Association or alternatively you can find a Find a lawyer .
Other useful points of contact for transferors and transferees to obtain information and support are the Chamber of Commerce organisation and the start-up service .
Time frame for a company handover
For an orderly and successful handover, a planning horizon of 5-10 years is appropriate, depending on the size and complexity of the company. This includes the sales process, which, depending on the attractiveness of the company and other circumstances, takes on average between six months and two years. The planning should be documented in writing.
Support for company takeovers
Various funding opportunities are available. They include subsidised loans, one-off investment grants, tax and fee concessions and consultancy grants. People who have used these grants rate them positively and as worth the effort.
Unfortunately, the funding landscape is confusing and varies from state to state. There are also funding programs at federal and EU level. The funding landscape is constantly changing. It is important to do your research beforehand so as not to waste money. Your tax advisor may be able to help you further, or you can get an initial overview of whether and which subsidies are available to you by following the link to the Chamber of Commerce’s subsidy database or the Austria Wirtschaftsservice GmbH subsidy pilot.
Funding for the hotel and tourism sectors: ÖHT (Austrian Hotel and Tourism Bank), special funding for young entrepreneurs is also possible.
The New Business Start-up Promotion Act (NEUFÖG) exempts new business start-ups as well as business and partial business transfers from various state taxes and fees under certain conditions.
Important: The business transferee must have obtained a confirmed declaration of the (partial) business transfer (official form NeuFö) before the first contact with the authorities. The relevant form is available from your Chamber of Commerce or as an online form , and can be submitted electronically. A mobile phone signature or citizen card is required for this.
Company exchanges in Austria
Here you will find general information about advertisements on a company exchange and their advantages and disadvantages.
Especially for sellers or potential buyers of smaller companies, an advertisement on a company exchange can be a way to draw attention to themselves. There you will find companies that are advertised for takeover as well as the opportunity to offer your own company for takeover. The Austrian Chambers of Commerce also operate a succession exchange. The advertisements are free and can be placed anonymously.
Useful links for selling a business in the UK
You are a self-employed sole trader, a partnership or a GmbH and the company is to be sold: Your responsibilities
Who needs to be informed in this case and what needs to be taken into account? As for the government side, this British government website provides information.
Selling a company in Great Britain via a sales platform
Numerous SMEs are offered on so-called businesses-for-sale websites, partly by the owner themselves, partly by business brokers. The largest, most professional and best known platforms are RightBiz and BusinessesForSale . RightBiZ’s focus is on food, while BusinessesForSale’s focus is on retail and food. Services are the focus of Daltonbusiness.com .
frequently asked questions
How long does a company sale take?
Avoid a hasty transaction. Plan and prepare the sales process well in advance.
Depending on the type of handover, the time from initial contact to the actual handover varies. On average, a succession within the family takes 6.5 years, an internal company takes 3.3 years and an external company takes 1.6 years. Depending on the size of the company and the complexity of the transaction, it can be quicker in exceptional cases, but it can also take significantly longer.
Can I sell my business myself?
If you have experience in selling a business, you can do this. If you have no experience or expertise, we advise against it. Mistakes can cost you dearly, and not just financially. There are also tax and legal aspects that need to be considered. Get expert advice in good time, but make the decisions yourself.
What forms of company succession are there?
A successor can be within the family, within the company or outside the company. Roughly speaking, three forms can be distinguished:
Purchase against a one-off payment, transfer against multi-year or recurring payments (pensions, installments, permanent charges) and
Gift (anticipated inheritance).
What are the typical steps involved in selling a company?
Development of a strategy, preparation of a company valuation and sales documentation, neatly prepared figures and a realistic price expectation, buyer search: longlist/shortlist; if possible, approach several suitable potential buyers at the same time, negotiations: if possible with several interested parties at the same time in order to strengthen the negotiating position, carrying out a due diligence, conclusion of the contract: clarification of all relevant points, drawing up the purchase contract, processing and handover.
What is due diligence?
All relevant documents are uploaded to a protected virtual data room and can be viewed by the potential buyer via the Internet. The volume of data is always related to the size and complexity of a company. Traditionally, the audit focuses on the following areas: finance and taxes, legal, organizational and, if necessary, technical matters.
How is the price of a company calculated?
The company value is not the price, but a basis for pricing. The price is determined by supply and demand as well as negotiations. The seller wants to get the maximum price for his company, the buyer wants to pay as little as possible. The purchase price should be fair for both parties. The purchase price should be able to be paid off after 5-8 years.
How do I get the maximum price when selling a company?
1. Someone actively approaches you and makes you an offer. This gives you a comfortable negotiating position, especially if you are not in a hurry to sell.
2. You systematically consider who could be a potential buyer, approach everyone at the same time and then conduct negotiations with all interested parties in parallel. Competition stimulates business and drives up prices.
What can lower the selling price?
Important factors that can lead to a reduction in the sales price are: time pressure on the seller, lack of interested buyers, quick processing and cash payment, exclusion of liability, securing the continued existence of the company and jobs.
What is the job of an M&A consultant?
The main task of an M&A consultant is to ensure process reliability and avoid expensive mistakes. The goal is a solution that makes economic sense, is tax-efficient and legally possible. An experienced and well-connected consultant increases the potential buyer base and thus the chances of a successful sale.
How much does an M&A consultant cost?
After a non-binding assessment, in which your goals, sales strategy and support needs are determined, a reputable consultant will make you a written offer if he or she estimates the probability of success to be high under the given conditions (e.g. your price expectations).
Depending on the industry, company size and transaction volume, a performance-related commission of between 3-10 percent is usual. A fixed component is also common, e.g. monthly or when certain milestones are reached. Some Examples for Fee models
What makes a company unsellable?
Excessive pricing and an unsustainable business model are the main reasons that can make a company unsellable. If a company is too owner-heavy, the business situation is continually deteriorating, or the documentation is inadequate or not truthful, these are further reasons that make a sale difficult.
A sale under massive time pressure, e.g. for economic or health reasons, can easily mean the end before a sale can be realized.
What is the difference between an asset deal and a share deal?
In an asset deal, the assets of a company are acquired individually. Advantage: minimization of liability risks, disadvantage: very confusing depending on the size of the company. In a share deal, the buyer acquires company shares (stocks, business or shareholder shares). Advantage for the seller: The capital gains are tax-privileged.
