Successful company sale
Selling a business: what you should know
Here we put together everything worth knowing and considering about the sale of a company that is important from an entrepreneur’s point of view. The site is continuously expanded and updated.
What all has to be taken into account? Which mistakes should be avoided? What affects the price? When and where does it make sense to be supported by an M&A advisor? What does this cost? Where can I get further information? Here you will find all this and much more.
Are you already thinking about selling your company, but not 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, will inform you about options for action and, if necessary, will be happy to put you in touch with the most suitable consultant from our international network. Depending on your requirements, you will receive support for the entire sales process or just for a part of it.
Related topics : Use our current online company valuation for an evaluation based on current market data and individual value drivers. In addition, we publish the current valuation multiples for numerous countries, sectors 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 – general topics
Company sale: definitely consider
The time factor
Avoid a rushed transaction. Plan and prepare the sales process in good time.
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 family-internal succession takes 6.5 years, an internal transfer 3.3 years and an external transfer 1.6 years. Depending on the size of the company and the complexity of the transaction, it can be faster, but also take longer.
Sell the company yourself
How much experience in corporate sales do you have? There is a high probability that selling your own business is a one-time affair, a situation that you have not found yourself 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 busy with day-to-day business. There is not enough time to prepare and carry out the demanding and complex sales process, which can take several months or years and can suddenly become intense at any time. Neglecting day-to-day operations during this time can seriously harm the company, its value and its salability.
How great is the need for discretion? An external consultant can search for potential buyers and clarify their interests without immediately having to disclose the identity of the seller. Who is eligible as a buyer? The higher the benefit for the buyer, the higher the achievable purchase price will be. Finding that 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 a bare minimum, unless you are an expert in commercial contracts, the contract of sale should be reviewed by a solicitor experienced in the field. For companies of a certain size (roughly more than EUR 1 million turnover), the benefits of comprehensive advice, i.e. the increase in value through optimal process management, increased sales opportunities and minimization of risks, are in good relation to the costs of a consultant. For smaller companies, it can 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 a specialist.
Forms of company succession
A company sale can be family-internal, company-internal or company-external.
There are roughly 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 succession plan, the price is usually below the market price. An average of 10-20 percent is common here.
The 7 typical steps of a successful company sale
Numerous steps have to be completed from the first thoughts of selling a company to the closing (final transfer of ownership in a defined manner).
1. Preparation – The most important questions to ask at the beginning:
2. Determine company value and create sales documentation:
Company valuation and sales documentation are each based on two pillars. On the one hand on the financial figures – the past, present and the forecast future – 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 actual state 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 non-disclosure 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 anonymous 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" earning power and potential of the company. Whenever possible, initiate positive changes yourself so that an upward trend can be identified.
In addition, there may be means and measures that can be used to improve the numbers in the short term, for example by reducing costs.
4. Buyer Search – Who is a potential buyer for my business?
A financial investor, a strategic or a private investor? Is there a potential buyer in the ranks of your own management or within the family? Does it make sense to address a broad spectrum or is it better to address specific individuals?
Financial investors, such as private equity funds or family offices, primarily look at the profit and sufficient cash flow to finance the borrowed capital.
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 outside capital, an increase in the company’s value and a profitable resale. The financing costs must be borne by the purchased company, ie 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 innovative and growth sectors.
Strategic investors are usually invested for the longer term and can be competitors, customers, suppliers or business partners who want to strengthen their own business model by acquiring a company along the value chain or in related or complementary areas. This can e.g. B. through the acquisition of know-how (e.g. processes and patents), a regional expansion of business, the synergetic use of economies of scale and group effects or through access to new customer groups. In addition, strategic investors also invest in new business areas to compensate for fluctuations or declines in the traditional core business. Buying a company with a lot of sales (and little profit) can also make sense in order to improve your own cost structure. For this reason, NIMBO also takes sales into account in the analysis in addition to profit.
In the case of a sale to a strategic investor or a financial investor, the sales 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.
There is usually a family or loyalty discount for a family or company-internal successor. In both cases, the sales price thus remains below the theoretical company value.
In consultation with the seller, the consultant discreetly searches for potential buyers, either on the basis of a specific suggestion from the seller (e.g. from the competition), in his own network or from potential buyers identified through research.
The address takes place exclusively with the express consent of the seller. In general, the seller’s identity is not revealed at this stage. If there is interest, the potential buyer will find out who it is after signing a non-disclosure agreement and will be given the detailed exposé. If the consultant is well connected both in the industry and in the region in question, this increases the chances of a successful sale.
5. Review and selection of prospective buyers
In the best case, 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 your wishes, the consultant takes part in this meeting or takes on an active role, for example by moderating the conversation.
Once the management meetings with all interested parties have been completed, the next step is the request to submit a non-binding purchase offer. If you receive several offers, the worst ones are sorted out and only the best ones advance to the next round.
Again and again sales fail because of the financing. It is important to check in good time whether the potential buyer has the necessary financial resources or will receive appropriate financing.
6. Negotiations and conducting due diligence
The negotiation process is influenced by economic as well as tactical factors, as both sides try to achieve the best possible result for themselves. This should not cause the process to abort.
Situational discussions have nothing to do with professional negotiation tactics. It is important that your own concrete interests, expectations and fears and those of your negotiating partner are clearly defined. As a mediator, a consultant can do a lot to lay the foundation for a constructive discussion.
The most common reasons that lead to the failure of negotiations are different ideas about price, guarantees and risk taking. Creativity and openness to alternative transaction models are important. For example, deferred payments that are dependent on the future development of the company can be a means of building a bridge between the different price expectations. The role of a consultant is to bring appropriate ideas into the negotiations.
If so-called deal breakers appear late in the negotiation process, this is particularly annoying for everyone involved, since 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.
Here the consultant plays an important role. On the one hand by addressing possible critical points in advance and putting them up for discussion, on the other hand by listening carefully during the negotiations to ensure that both parties say and mean the same thing.
If it becomes concrete, the consultant drafts a preliminary contract and supports a due diligence (company audit) by setting up a data room and advising the entrepreneur on the selection of the documents to be posted there. If the due diligence is satisfactory and agreement has been reached on all points, the buyer submits 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 required.
The sales 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 of the company through its paces
Serious prospective buyers, usually after submitting a non-binding offer (a non-binding declaration of intent to buy), carefully examine the company for sale 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 checked in one room, but today the relevant documents are usually uploaded to a virtual data room with password protection and can be viewed there via the Internet. The effort involved is always related to the size and complexity of a company.
Due Diligence Checklist: What is it and what do I need to provide?
Traditionally, the exam focuses on three areas:
finance and taxes
This is essentially (without claiming to be complete).
Legal Matters
This is about
And if applicable, the technical and organizational area
This is about
The areas can also be considered
Does the buyer fit my company?
Critical factors can be the management style, decision-making processes, communication, transparency and possible integration into an existing, possibly larger organization. If there are discrepancies, the top performers often leave the company after a short time. This can lead to massive slumps in productivity and a deterioration in earnings.
If possible, the management or the service providers should be involved in the sales process. If it is possible to create a sense of unity with the new owner, the employees 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 the business in a similar way as before.
Selling to a financially strong investor can significantly increase the growth of the company if it makes good 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. In the case of a sale to a competitor, there are variants that a foreign company wants to enter the market or that a local competitor wants to buy market shares.
There are three different variants of succession within the family: a gift (anticipated inheritance), a transfer against recurring payments (pensions, dividends, etc.) or a purchase. When selling to a family member, we see price reductions of 30% on average compared to 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 transfer stands for stability and the continuation of business as before. If the buyer or buyers do not have enough equity, a loan from the entrepreneur can be a solution. We observe a price reduction of 10-20% for internal transfers.
Tax assessment for family or company transfers
In the case of a company sale within the family or between a company member and the shareholder, the tax office is increasingly questioning the purchase price.
The Valuation Act (BewG) stipulates how a tax company valuation is to be carried out. This primarily concerns the collection of gift and inheritance taxes.
In Germany, only the figures for the last three financial years are considered when assessing a company for tax purposes, future profitability is not taken into account. In the case of small and medium-sized companies, the tax assessment is usually well above the sales prices that can be achieved on the market. The tax office is assuming a nine-fold EBIT. 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 Accountants (IDW S1) is ideal here. However, the company valuation must be prepared before the transaction.
INFLUENCES ON THE SALE PRICE
What is the best starting position to achieve a high price?
- Someone actively approaches you and makes you an offer.
Since someone here is already keenly interested in your company, you have a comfortable negotiating position and a good chance of getting a price that is (significantly) higher than the value, especially if you are not in a hurry to sell. A company valuation gives you a clue. - They systematically consider who could be potential buyers, approach everyone at the same time and then conduct parallel negotiations with all interested parties. Competition stimulates business and drives up prices.
Is the enterprise value identical to the selling price?
Enterprise value is not the price, but a basis for pricing. The price results from supply and demand as well as negotiations. Parameters in the negotiations are, 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 sides. The purchase price should be paid off after 5-8 years.
Typical sales conditions
Under what circumstances is a buyer willing to pay a higher price?
When does the seller tend to be willing to lower the price?
Companies sell with consultant support
What is his job and what added value does an M&A advisor offer?
M & A consultants (M & A = mergers and acquisitions) ensure process security. This helps to avoid expensive and time-consuming mistakes.
The consultant has an outside view of things, is neutral, objective and free from obstructive emotions.
He knows the sequence of the 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 in both the industry and the respective region ensures that the group of buyers is large enough and thus increases the chances of a successful sale.
Discreet action is essential. If the intention to sell becomes public too early, this can have a very negative impact on the company, be it through resigning employees, unsettled customers or suppliers. A consultant is a middleman and offers discretion. He also knows when, to whom, what information should be disclosed and in which situations caution is required.
Based on 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 the negotiations, the consultant knows the usual regulations but also the stumbling blocks and can bring in new ideas. He can address possible critical points in advance. By listening carefully during the negotiations, he can avoid misunderstandings which, in the worst case, could lead to the negotiations being broken off.
There are two types of advisors. There are consultants who accompany the entire sales process from the preparation, through the search for a buyer, to the conclusion of the contract, including the coordination with lawyers and tax consultants. 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. This variant can be sufficient for small companies and is usually only associated with success-related costs.
What can’t a consultant do?
The consultant can relieve the company owner of a lot of work in order to keep the time burden as low as possible. Nevertheless, there will still be a lot to do for the owner. Especially at the beginning, the consultant is dependent on the cooperation of his customer 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.
Using 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 the companies that are ready to be handed over cannot be sold and are shut 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 advisor cost?
A serious consultant will get an overview of your company without obligation and free of charge, work out your goals, the sales strategy and your needs together with you. If he estimates the probability of success under the given framework conditions (e.g. your price expectations) as high, he will then make you a written offer.
If you commission the consultant with 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 success-based basis. Advantage for the customer: Costs are only incurred in the event of success. 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 price that can be achieved.
Fixed consultancy costs (basic costs, retainers)
A sales process usually takes 6-12 months, but it 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 costs for the consultant 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 when certain milestones are reached (e.g. completion of the 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 calculated only for the first 3-6 months or over the entire term of the sales process. A few consultants do without a fixed component during the entire sales process. In this case, the performance-related component is higher. In the event of success, it is a fair solution for both sides to offset the fixed cost share against the success commission.
If a flat fee is agreed, the amount depends on the expected workload of the consultant (especially for the company documentation). For smaller companies with expected transaction values in the range of EUR 1 to 5 million, they usually total EUR 5,000 to EUR 20,000, with monthly payments in the range of EUR 1,000 to EUR 4,000.
Success-related consulting costs
Advisors work primarily on a contingency basis, meaning they receive a percentage of the transaction value. The lower the probable sales price, the higher this percentage, since the amount of work depends only to a limited extent on the transaction volume and more on the complexity of the transaction. An additional determining factor for the amount of compensation is the marketability of the company and the estimated time that 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 increase significantly through 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 an active and systematic search for a buyer. These are to be understood in combination with a fixed, success-independent component.
Usual consultant commission in % of the sales price – varying 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.
If the consultant only works as an intermediary/broker and does not otherwise accompany the sales process, he also receives a commission, but the percentage is lower.
If you don’t want to transfer the entire sales process to the consultant, but only want help in certain sub-areas, such as creating the exposé, you will be charged an hourly fee / daily rate. The usual daily rates are between €1,000 and €2,000, although the amount says nothing about the efficiency of the consultant and you may end up with a lower total bill from 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 is a large number of billing models in countless variants.
To give you an impression, some common models are explained below as examples.
| fee model | Description | The invoice | fee |
| contingency fee | The consultant works exclusively on a success basis. His success fee is 5% from the sales amount. If it is not sold, the consultant receives nothing. (There are consultants who hedge 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) |
| base and contingency fee | Basic fee: When the contract is concluded, the consultant charges 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) after a non-disclosure agreement (NDA) has been signed by 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 others are free of charge) Visits are only initiated with the consent of the client. If a prospective customer has signed a letter of intent to purchase, the consultant will charge €1,800 (plus VAT). In this case, the consultant charges a graduated success fee from the transaction value 5% for the first million €, plus 4% for the second million €, plus 3% for anything over €2,000,001 but at least €25,000 plus VAT in the case of a company sale. 1.5% will be 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, eg 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 credit) plus €50,000 (5% of €1 million) plus €36,000 (4% of €900,000) minus €1800 (Payment for 2 visits at poss. buyers) minus €1800 (Payment for a LoI) | €86,300 (plus VAT) |
| Monthly payment plus contingency fee | Basic fee: The consultant receives a fixed monthly payment of €4,000 (plus VAT) from the conclusion of the contract for the entire contract period (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). 1.5% will be 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 credit) | 144.500€ (plus VAT) |
| hourly fee according to expenditure, chargeable to contingency fee | Basic fee : The consultant requires an hourly fee of 150 €. Estimated number of hours for a easily sellable company: – Documentation, processing of figures and research: 50 hours – Buyer contact: 50 hours – Meetings and negotiations: 30 hours – Contract conclusion and follow-up: 10 hours Success fee : The consultant charges 5% of the transaction value (purchase price). In the event of success, the base fee will be deducted from the success fee. | Total transaction amount: €2 million Basic fee: €21,000 (Total remuneration according to expenditure: 140 hours at 150 €) plus €100,000 (5% of 2 million) minus €21,000 (Hourly expenditure offset against the success fee) | 79.000 € (plus VAT) |
Sell an online SHOP
Depending on the amount of sales and profit, four categories of buyers come into question as a buyer for an online shop:
- Private buyers, employees: tend to buy from 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: As long as 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.
SELL A COMPANY THROUGH AN ADVERTISEMENT IN A COMPANY EXCHANGE
An advertisement on a relevant platform or a so-called company exchange can be a way for sellers or potential buyers of smaller companies 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. Some platforms have a regional focus or specialize in specific 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 are looking for a successor in the medium term or who want to get an overview of the successor market. On the buy side for talented young people who are faced with the decision to start their own business or to continue an established business, or for employees for whom self-employment might be an option.
The cost of using a company exchange varies widely. Therefore, the fine print should be read carefully. The bandwidth ranges from free and paid advertisements and add-on consulting packages, to monthly fees with and without a minimum term, to a fixed amount or a percentage success commission if a transaction is made via the advertisement.
In addition to differences in costs, there are also differences in the quality of the platforms. Make sure that quality assurance is in place and your data and profile input is checked before activation.
Country-specific information can be found here for Germany , Switzerland , Austria and the UK .
Possible problems
If the price is set unrealistically high, you will not be successful with your ad. In the UK, for precisely this reason, only 5% of companies listed on a company exchange appear to actually sell.
Depending on how difficult it is to maintain anonymity. If you don’t reveal enough about yourself, you won’t attract any interested parties. If the intention to sell becomes public, this can have a negative impact 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 sightseeing tourists who simply like to visit companies but have no intention of buying the company.
Scammers also roam here. Distrust is appropriate when the buyer wants to buy the company sight-seeing, will accept any price, propose foreign exchange deals, or transact abroad.
Company succession in Germany
In 2020 and 2021, many medium-sized companies primarily had to fight for survival. Any future or handover plans have been forced to pause during this time. A much more positive picture is emerging for 2022: around 230,000 companies are aiming for a successor solution by the end of the year. Despite greater optimism on the part of the entrepreneurs: the structural successor gap, which was caused on the one hand by the low birth rates and on the other hand by little interest in self-employment, makes the search for a suitable successor more difficult.
Initiatives have emerged to bring together those willing to hand over and take over. One example is the RKW Competence Center , which has launched numerous model projects .
Every year, the Chambers of Commerce and Industry offer information, advice and support to around 30,000 entrepreneurs, both entrepreneurs who are looking for a successor and future entrepreneurs. ATTENTION: The link is not working at the moment due to a cyber attack on the IHK! The Kreditanstalt für Wiederaufbau, which has also published a checklist for successors, offers numerous funding offers for future entrepreneurs.
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 Corporate Succession” in your region on the steuerberater.de website. Enter your zip code and select “company succession” from the specialist advisor. Mistakes or omissions can cost you dearly.
Sale of company – exemption for entrepreneurs 55+
A sole proprietor may be entitled to an age exemption when selling their business. If the entrepreneur is at least 55 years old, the capital gain remains tax-free up to €45,000 upon request. The allowance can only be applied for once. The upper limit for the full exemption is €136,000 on capital gains. In order to benefit from the exemption, 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 you like to sell them? If there are no other provisions in the partnership agreement, the shares can be sold to another shareholder or to an external person. If a right of first refusal for the shareholders is noted in the partnership agreement, this must be observed. It should also be checked whether the consent of the shareholders to the sale of shares and the buyer is obligatory 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, the support of a specialist lawyer is recommended in order to avoid liability risks or economic disadvantages for the seller.
Taxes due on sale of shares
- In the case of a small participation of less than one percent within the last five years, a one-off withholding tax of 25% (or, on application, the personal tax rate of less than 25%), plus a 5.5% solidarity surcharge and, if applicable, at least 8% church tax, is due on the sales profit .
- If the share in the company has been more than one percent in the last five years, the so-called partial income procedure comes into play. Only 60% of the total profit is taxed according to the personal tax rate, 40% remain tax-free. According to Section 17, paragraph 3, there is a proportionate exemption (€9,060 for a 100% stake), which reduces the amount of the taxable (= 60% share) overall profit. Trade tax does not apply.
- If a limited liability company sells shares, only 5 percent of the sales profit is taxed as a non-deductible operating expense according to a special regulation of the Corporate Income Tax Act if the company’s participation is at least 15 percent. In addition, trade and corporation tax 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 place a sales offer or a purchase request. The largest, nexxt-change , is supported by the Federal Ministry for Economic Affairs and KfW. Your 730 regional partners offer free support and will help you, for example, with the formulation of the advertisement and support 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 resident 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 the general information on the subject of company sales
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.
Corporate succession should be planned and approached in a structured manner over the longer term, especially if the company represents the entrepreneur’s old-age provision. Financial planning for entrepreneurs is complex. Private provision and wealth accumulation are often neglected. In the event of sudden death, it can only be urgently advised to conclude appropriate marriage and inheritance contracts as a precaution in order to ensure the continued existence of the company and to find an individually suitable solution. 30 percent of the companies due for succession cannot be handed over and are ultimately shut down, among other things because the owner does not take care of his successor or takes care of it too late. Individual companies in particular have greater problems with succession, since those interested in starting a small company are more likely to start a new business than take it over. This not only has economic consequences for the owner, but also for numerous employees.
Tax optimization before the sale
Unbundle private and company finances : if the owner only pays a low wage and/or a low dividend for years for tax reasons, high non-operating liquid funds can accumulate in the company. In the event of a sale, the buyer has to pay for a higher purchase price. This situation is disadvantageous for him, since he can only distribute them at a loss in the first five years, since they would be classified as indirect partial liquidation and taxed accordingly.
Tip: Pay out non-operating liquidity as special dividends before selling. The tax burden can also be reduced by paying into the pension fund, but there must be at least three years between the purchase into the pension fund and the subsequent lump-sum withdrawal.
Transfer non-operational real estate into private ownership
Company properties whose value is comparatively high in relation to the value of the company should also be removed from the company’s assets, for example by selling them to the company owner.
division of the company
If the company is involved in more than one core business, it may be advisable to split up the company and sell the parts separately.
Family company succession
Tip: The University of Sankt Gallen regularly offers further training seminars on the subject of family businesses and succession , especially for family businesses.
Pricing for transfers within the family
With any succession plan, the company must be evaluated and a price set. In order to avoid later conflicts, it is advisable to look for an independent specialist for this task. A Credit Suisse survey from 2016 showed that the price for family members or friends is lower than for an external successor. Both groups receive an average discount of 41% of the market price. 18% of the family-internal transferees even got the company «free», for example via an advance inheritance or a gift.
Cantonal differences in gift tax
The gift recipient is subject to gift tax. Spouses and children are tax exempt in most cantons. Exception: there are tax allowances in the cantons AI, GR, JU and VD.
Cohabiting partners are not equal to spouses. You will be taxed in the highest tax bracket; The cantons of OW, Schwyz and Zug are exceptions.
Tax optimization for transfers within the family in Switzerland
Many of the Swiss family businesses have too much liquidity that cannot be transferred to the entrepreneur’s private assets without having to pay substantial taxes.
The solution is to set up an heir or acquisition holding company, which reduces the tax burden on the seller and thus enables succession at a reasonable price. In such circumstances, it is advisable to obtain a so-called tax ruling from the responsible tax authority, a binding legal analysis obtained beforehand.
The newly founded joint-stock company (the holding company) takes over the family business. For the takeover, the AG borrowed capital. The holding company receives dividend payments from the subsidiary, from which it repays the borrowed capital. The advantage of this is that the repayment of the loan can be linked to the course of business. Various models are conceivable when drafting the contract, depending on who the borrowed capital comes from. For example, the previous owner could keep the majority of the shares until half of the loan is repaid by the holding company.
Sale of shares from private assets
An important question is whether a sale of shares from private assets is tax-free
represents capital gain. This is due to various factors in the seller,
but also depends on whether the buyer makes distributions in the five years after the purchase, which are to be assessed as withdrawals of substances. If this "substance" was already available before the purchase, was distributable under commercial law and not essential to the business, and the seller knew that funds were being withdrawn from the company for financing purposes, the sale is taxable.
A tax expert should check whether these facts, which trigger a tax liability, are actually fulfilled in the individual case. Depending on the complexity of the transaction, it is also strongly advisable 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.
An advertisement on a company exchange can be a way to draw attention to yourself, especially for sellers or potential buyers of smaller companies. 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 existed for some time include, for example, Companymarket and firmforsale .
funding and funding
In Switzerland, economic development for SMEs is generally organized on a cantonal basis. On this page of the Department of Economics, Education and Research you will find useful links on the subject of business development in your region. There is also information about regional funding agencies 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 would you like to take over a company? We have put together a range of information and useful links for you. Due to demographic change, approx. 6,500 age-related company handovers per year can be expected in Austria in the next few years. The proportion of family-internal handovers has continuously decreased in 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 information brochure from the Chamber of Commerce provides a very good initial overview for those transferring or taking over an Austrian company.
Important: Every case is unique! A lot depends on various factors and there are no universal answers. It involves legal, especially tax, administrative and business issues, as well as financing issues. If in doubt, seek professional support.
There is a lot to consider, and mistakes should be avoided as far as possible.
Help with tax law issues
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 Notary Association will be useful for you. You can find a lawyer in your region and with the desired specialization on the Austrian Bar Association website or alternatively you can find a lawyer here.
Also useful contact points for transferors and transferees to receive information and support are the Chamber of Commerce organization and the start-up service .
Time frame for a company transfer
Depending on the size and complexity of the company, a planning horizon of 5-10 years is appropriate for an orderly and successful handover. This includes the sales process, which takes between six months and two years on average, depending on the attractiveness of the company and other circumstances. The plan should be documented in writing.
Support for company takeovers
Various funding options are available. They include concessionary loans, one-time investment grants, tax and fee concessions, and advisory grants. People who have used these grants rate them positively and 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 can help you if necessary or get an initial overview of whether and which funding is suitable for you using the link to the funding database of the Chamber of Commerce or the funding pilot of Austria Wirtschaftsservice GmbH
Funding for the hotel and tourism sectors: ÖHT (Austrian Hotel and Tourism Bank), special funding for young entrepreneurs is also possible.
Under certain conditions, the New Business Support Act (NEUFÖG) exempts new businesses and business and partial business transfers from various state taxes and fees.
Important: The business taker must have obtained a confirmed declaration of the (partial) business transfer (official form NeuFö) before the first contact with the authorities. The appropriate form is available from your Chamber of Commerce or as an online form , and it 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.
An advertisement on a company exchange can be a way to draw attention to yourself, especially for sellers or potential buyers of smaller companies. 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 successor exchange. The advertisements are free of charge and can be placed anonymously.
Useful links on selling a company in the UK
You are an independent sole proprietor, 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 considered? As far as the government side is concerned, this website provides information for the British government .
Selling a company in the UK via a sales platform
Numerous SMEs are offered on so-called businesses-for-sale websites, partly by the owner himself, partly by business brokers. The largest, most professional and well-known platforms are RightBiz and BusinessesForSale . RightBiZ’s focus is on food, BusinessesForSale’s focus is on trade and groceries. Services are the focus of Daltonbusiness.com and BusinessTradeCentre , the only platform where you can list your business for free, focuses on bars, commercial real estate, services and digital businesses.
frequently asked questions
How long does a company sale take?
Avoid a rushed transaction. Plan and prepare the sales process in good time.
Depending on the type of handover, the time from initial contact to the actual handover differs. A family-internal succession lasts an average of 6.5 years, an internal company 3.3 years and an external company 1.6 years. Depending on the size of the company and the complexity of the transaction, it can be faster in exceptional cases, but it can also take much longer.
Can I sell my business myself?
If you have experience in selling a business, you can do that. If you do not have any experience or expertise, it is not advisable. 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 types of company succession are there?
A successor can be within the family, within the company or external to the company. Roughly three forms can be distinguished:
Purchase against one-time payment, transfer against multi-year or recurring services (pensions, installments, permanent charges) and
Donation (anticipated inheritance).
What are the typical steps involved in selling a company?
Development of a strategy, creation of a company valuation and sales documentation, clearly prepared figures and a realistic asking price, buyer search: longlist/shortlist; if possible address 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 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 there by potential buyers via the Internet. The amount of data is always related to the size and complexity of a company. Classically, the examination focuses on the areas: finance and taxes, legal, organizational and, if necessary, technical matters.
How is the price of a company calculated?
Enterprise value is not the price, but a basis for pricing. The price results from 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 sides. The purchase price should be paid off after 5-8 years.
How do I achieve the maximum price when selling a company?
1. Someone actively approaches you and makes you an offer. Here you have a comfortable negotiating position, especially if you are not in a hurry to sell.
2. You systematically think about who could be potential buyers, approach everyone at the same time and then conduct parallel negotiations with all interested parties. Competition stimulates business and drives up prices.
What can depress the selling price?
Important factors that can lead to a reduction in the sales price are: time pressure on the part of the seller, lack of prospective 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 advisor?
The main task of an M&A consultant is to establish process security and avoid expensive mistakes. The goal is a solution that makes economic sense, is tax-friendly and legally possible. An experienced and well-connected advisor increases the number of potential buyers and thus the chances of a successful sale.
How much does an M&A advisor cost?
After a non-binding appraisal, in which your goals, the sales strategy and your need for support are determined, a reputable consultant will make you a written offer if he assesses the probability of success under the given framework conditions (e.g. your price idea) as high.
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, eg monthly or when certain milestones are reached. Some examples of fee models
What makes a company unsaleable?
Excessive price expectations and an unsustainable business model are the main reasons that can make a company unsaleable. If a company is too owner-heavy, if the business situation deteriorates continuously, if the documentation is insufficient or not true, these are further reasons that make a sale difficult.
A sale under massive time pressure, eg for economic or health reasons, can easily mean the end before a sale can be realised.
What is the difference between an asset deal and a share deal?
In an asset deal, the assets (commercial goods) of a company are purchased 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 (shares, business or shareholder shares) Advantage for the seller: the capital gains are tax-deductible here.
