Interested in selling your company or selling shares in your company? When people sell companies, they often have no hands-on experience of what it’s actually like – sitting as a shareholder on one side of the table, with experienced buyers on the other consisting of M&A professionals and their M&A advisors. That’s when it’s good to be able to rely on the personal support of our experienced corporate finance consultants, who can answer any of the questions that might arise.
Why you can bank on our professional advice when selling your company.
The benefit to you: our top-level consultants provide you with individual support. Our aim at KP Tech is to ensure that the comprehensive and professional advice we give you significantly reduces the level of risk involved in selling your company or shares in a company. After all, everyone wants the transaction to be a success.
Corporate finance consulting: selling companies
Questions & answers on selling a company:
What you should know about selling a company.
What needs to be considered when selling a company?
The most important questions you should consider as a shareholder when selling a company:
- With or without an M&A advisor? Never sell on your own! Always consult professional M&A advisors. The higher success rate and the higher purchase price more than make up for the costs
- How is the purchase price paid? The M&A advisor's experience in structuring a transaction is worth its weight in gold
- How does the sale of the company run smoothly and without risks? A professional M&A process, e.g. in the form of a bidding process, strengthens the negotiating position and increases the purchase price and the probability of completion
- How much is the company worth on the market? Have a detailed company valuation drawn up before you enter the market with false purchase price expectations and end up breaking off the company sale process in frustration.
What does it cost to sell a company?
The cost of selling a company is 5% of the purchase price. For larger M&A transactions, the percentage for the M&A advisor decreases and for smaller transactions the percentage increases up to 10% of the purchase price. The costs for the sale of a company include the costs of the M&A advisor, the M&A lawyer and the tax advisor or auditor.
Who helps with the sale of a company?
Company sale Germany, Austria and Switzerland: The task of an M&A consultant or M&A advisor is to prepare the company for sale, prepare all documents professionally, identify the best potential buyers, implement the company sale in a structured and swift manner - and achieve a high purchase price in the process. Many years of experience with many successfully advised company sales and an excellent network are crucial here.
What does M&A consulting cost?
The cost of an M&A advisory service is between EUR 8,000 and EUR 10,000 per month (retainer). The larger and more complex the company sale, the higher the monthly retainer. In addition to the retainer, the M&A advisor receives a success fee in the event of success. The success fee is calculated as a percentage of the purchase price. The following applies: the higher the purchase price, the lower the percentage for the success fee.
Never choose an M&A agent or M&A broker who only works on a contingency basis. Such an agent/broker will invest little time in preparing professional sales documents (e.g. information memorandum) or in advising the company in the M&A process and will instead try to make the "quick deal". If this does not work, the business broker will already have the next project and your project will become a dead end.
Who pays the notary when selling a company?
The buyer always pays the notary fees and his advisors. The seller only pays the advisors he has appointed (M&A expert, M&A lawyer, tax advisor/auditor).
Is a company sale tax-free?
Taxation on the sale of shares (shares: therefore a share deal) explained using the example of a GmbH (in Germany).
Privately held GmbH shares
In the case of GmbH shares held as private assets by a private individual (or via a partnership), a capital gain arises in Germany when the company is sold (share deal). This profit is subject to taxation according to the so-called partial income method.
Under the partial income method, 60% of the capital gain is subject to income tax at the personal tax rate. This results in taxation of approx. 30% on the sale of the company (at a tax rate of 50%).Sale of assets (asset deal)
In an asset deal, the GmbH (and not the shareholders) sells individual assets.
- The assets are usually assets, software, products, inventories, patents or licenses as well as real estate.
- In the case of an asset deal, taxation takes place at the level of the company, i.e. the GmbH, and not at the level of the shareholders. The GmbH pays corporation tax and trade tax on the capital gain from the sale of the assets - as with operating profits.
When should you sell your company?
A good time to sell a company is when the company has developed positively in the last few years before the sale and continues to develop positively in the year of the sale. It is best if there is no pressure to sell - neither of a monetary nature from the company nor of a private nature from the entrepreneur, such as health or other private problems. If the entrepreneur, as an outside third party, would absolutely buy the company, then the time is right to sell the business.
How long does an M&A process take? What does an M&A advisor do? How many M&A processes fail?
Duration: A good time estimate can be given for the duration from the first contact with the buyer to the conclusion of the contract: 4 to 8 months can be planned for the actual M&A process. A professional execution of the company sale helps to shorten the M&A process, increase the probability of closing and achieve a high purchase price.
Tasks of the M&A advisor: The M&A advisor professionally prepares all documents for the potential buyers. Furthermore, the M&A advisor prepares the client optimally for all steps of the company sale process. The professional negotiation and drafting of the letter of intent are also key tasks of the advisor in the sales process.
How many processes fail when selling a company? With a very experienced M&A advisor, over 90% of M&A processes are completed successfully. With an M&A broker, >80% of company sales tend to fail.
How much does a company valuation cost? How can you determine the value of a company?
Costs of a company valuation: A brief company valuation is free of charge with many company value calculators on the Internet, but is very imprecise. Such a company value does not provide a meaningful indication of the purchase price that can be achieved when a company is sold. A professional company valuation by an M&A consultant costs between 10,000 and 20,000 euros. The costs are often offset against the success fee for the sale of the company.
The M&A consultant calculates the value of a company using the discounted cash flow method and comparable M&A transactions (multiplier method/ multiple method).Who carries out a company valuation? The company valuation is usually carried out by an experienced M&A consultant. In addition to the purely financial calculation of the company value, they are best placed to assess the market situation and other factors relevant to the purchase price.
Planning to sell your company?
We would be happy to support you by offering access to all areas of our expertise and our extensive experience in industry. Let’s get to know each other.
Sandra Preuss • Managing Partner
Michael Klumpp • Managing Partner
