Should I Sell My Company Now?

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In many cases, your own company is a life’s work, the sale of which needs to be carefully considered. With these precise considerations and preparations, you can make an informed decision about whether or not you should sell your company now.

Am I Emotionally Ready to Sell My Company?

Ask yourself: “Am I emotionally ready to let go?” Selling a company is often associated with a sense of loss. Make sure you are ready to part with your life’s work without feeling regret later. Take a look at the questions listed. How many questions do you tend to answer positively or with “yes”?

What Questions should I Ask Myself?

Self-reflection

  • Feelings and emotions: How do I feel about the idea of selling my company? Am I excited, anxious, sad, or relieved?
  • Personal values and goals: How does selling the company fit into my long-term personal and professional goals?
  • Identity and self-worth: To what extent are my self-esteem and identity linked to owning and running this company?

Practical Considerations

  • Financial security: Have I carefully reviewed my financial situation after the sale? Will I be financially secure?
  • Future plans: What are my plans after selling the company? Do I already have concrete ideas or projects that I would like to pursue?
  • Responsibility to stakeholders: How will the sale affect my employees, customers, and partners? Have I considered their perspectives?

Support Systems

  • Family and friends: Does my personal environment support me in my decision? Have I considered their opinions and feelings?
  • Mentors and advisors: Have I spoken to trusted mentors or advisors about my decision? What advice have they given me?
  • Emotional and psychological support: Do I have access to professional support, such as a coach, to manage this major change?

Future Vision

  • Fulfillment and meaning: Will I be able to lead a fulfilling and meaningful life without my company?
  • Control and influence: How will I deal with no longer having control over the company? Am I ready to let go of this influence?
  • Learning and growth opportunities: What new opportunities for learning and growth do I see in my life after the sale?

Assessment and Decision

  • Pros and cons list: Have I created a detailed pros and cons list that weighs all aspects of the sale?
  • Intuition and gut feeling: What does my gut tell me? Are there any inner resistances or strong positive feelings that I should consider?
  • Take time: Have I taken enough time to make this decision, or do I feel pressured?

What is My Company Worth?

Have your company professionally valued. Many sales fail due to unrealistic price expectations. If you know the value, it will be easier to achieve a fair and market-based price.

The Nimbo Online Company Valuation provides you with a serious initial indication.

How Can I Optimize Taxes before the Sale?

Seek advice from a tax advisor specializing in company sales at an early stage and get advice on the options available and the measures required to optimize the tax burden associated with the company sale. Depending on the legal form of your company, you have different options.

Is the Company Dependent on Me?

Does nothing work without your presence? Then that needs to change. Make sure that all existing processes and systems are documented. Invest in the further training of suitable employees and gradually transfer your functions and activities to a deputy or a management team. A strong management team that is willing to stay after the sale facilitates the transition and increases the value of the company. Are you also willing to stay in the company for a transition period, if necessary?

Are there Dependencies on Certain Customers or Suppliers?

A diversified and loyal customer and supplier portfolio makes your company attractive.

Are you dependent on a few customers or on a single supplier? Small businesses should always strive to minimize their dependencies on a few customers and suppliers. Try to strengthen their position. Diversification, building internal capabilities, strategic partnerships, and continuous risk management can, for example, be measures to strengthen their independence and increase their resilience to market changes. The Nimbo company value test takes these dependencies into account in its assessment.

Which Contracts Do I Need to Review before a Sale?

By carefully reviewing existing contracts, potential obstacles and risks can be identified and addressed early on. Check whether special regulations exist for the event of a sale and whether there are clauses that make a transfer to a new owner difficult or prevent it, or whether certain regulations may pose a financial risk to the buyer. In any case, take a look at the following contracts:

  • Shareholder agreements and articles of association
  • Credit and loan agreements
  • Employment contracts
  • Lease and rental agreements
  • Customer and supplier contracts
  • License and usage agreements
  • Insurance contracts
  • Warranty and guarantee agreements
  • Confidentiality and non-compete agreements

Is all Intellectual Property Secured?

Make sure patents, trademarks, and copyrights are properly secured.

Is the Current Market Environment Right for a Sale?

To find out whether the current market environment is right for a company sale, the following steps and sources can be helpful. By combining these sources and methods, you can get a comprehensive picture of the current market environment and make an informed decision about whether the timing is favorable for selling your company.

Where Can I Find Information about the Market Environment?

Economic Indicators:

Business cycles: Pay attention to the general economic situation. A growing economy is often a good time to sell.

Interest rate level: Low interest rates can make financing easier for buyers, which can have a positive impact on the selling price.

Stock market: A strong stock market can be an indicator of a positive market environment.

Industry-specific Analyses:

Market reports and studies: Read current market analyses and industry reports published by consulting firms such as PwC, Deloitte, or KPMG.

Industry associations and organizations: Many industry associations regularly publish reports on the state and trends in their respective industries.

Company Valuation:

Valuation by experts: You can have your company valued by an expert to obtain a realistic selling price and assess the market potential.

News and Financial Media:

Financial news: Follow financial news and business magazines such as Handelsblatt, the Financial Times, or the Wall Street Journal.

Online platforms: Websites such as Bloomberg, Reuters, or CNBC offer current information and analyses.

Networking:

Industry meetings and conferences: Attend industry meetings and conferences to learn about current trends and opinions first-hand.

Exchange with colleagues: Talk to other entrepreneurs who have recently sold or want to sell.

Regulatory Framework:

Legal changes: Pay attention to changes in legislation or regulation that could affect the sale of companies.

Who qualifies as a buyer?

Is internal succession conceivable or would you like to sell externally? Would you like the optimal succession solution for the continued existence of your company, would you like to secure the continued employment of your employees, or would you like to achieve the highest possible selling price? Depending on the situation, who is eligible as a buyer? Different types of buyers, such as strategic buyers or financial investors, offer different advantages. Choose the right type that fits your goals.

How Do I Design My Negotiation Strategy?

Create a list of your priorities and rank each item by importance. While it is important to have firm ideas, flexibility in certain areas is necessary to move the deal forward. Be prepared to compromise, but also know your “deal breakers”.

How Likely is it that the Business Can be Sold?

Not every business finds a buyer. Demographics are driving the seller’s market. Numerous business owners from the so-called Baby Boomer generation are retiring and looking for a successor. Germany in particular, but also Switzerland, Austria, France, and Great Britain, report that a lack of successors leads to a measurable increase in closures. On the other hand, we are currently observing that after mass layoffs of skilled workers – including those from the high-tech sector – interest in acquiring small businesses has increased.

The International Business Brokers Association (IBBA) states on its website that 50% of businesses that enter the market with the help of a broker are sold. Considering that brokers already carefully assess the chances of success when accepting mandates, this means that overall, fewer than 50% of businesses find a buyer. You increase your chances with careful preparation, good planning, and, if necessary, competent support. Do not lose sight of this issue, so you don’t find yourself under time pressure one day!