Many entrepreneurs ask themselves what characterises reputable advisors for the sale of a company. After all, a company sale is a long-term project that requires good preparation and implementation. How can you recognise a serious advisor for the sale of a company? What pitfalls lurk in the selection of an advisor? Watch out for these alarm signals.
Sales pressure after unsolicited contact
Do you know this? You receive unsolicited advertising calls, e-mails or letters referring to a large number of allegedly concretely interested prospective buyers for your company. An already banned copy of a business broker in the past read: ‘Our buyer department is currently receiving enquiries from potential buyers for a business in your industry as well as your region’. Nevertheless, dubious business brokers use similar formulations to give the impression that there are already concrete prospective buyers.
False promises
In the second step, a psychologically trained sales representative visits you. He again refers to the many allegedly concrete enquiries from prospective buyers. Already in the first conversation, this salesperson tries to get an order. In doing so, he often promises you two things:
1. already concretely interested buyers
Already in 2017, the DIHK ReportThe DIHK is pointing out that the search for the right company successor is becoming increasingly difficult. DIHK President Eric Schweitzer: “For many business owners, company succession is becoming the proverbial search for a needle in a haystack.
A well-maintained list of potential buyers helps reputable advisors for the sale of a company in their search. Nevertheless, no promise of a successful business succession can be derived from this. Rather, reputable business sale advisors use a variety of different channels in their search for buyers. “In times of the Lack of entrepreneurs the search for potential buyers is a special and time-consuming challenge for family businesses,” underlines Ingo Claus, consultant for business succession in Osnabrück and northern North Rhine-Westphalia. “Furthermore, the success of a company sale depends on many other factors. From our observation, such a promise is therefore unserious and only serves the quick conclusion of a brokerage contract.”
2. excessive company valuations
In the first meeting, the sales representative asks for your balance sheet data, your creditworthiness and your purchase price expectations. After a superficial evaluation, he ?determines? a sales price that is far above your expectations. In contrast to a serious Income approach to business valuation a price expectation determined in this way does not stand up to critical scrutiny. Caution is advised if an advisor already gives a “snapshot” of an achievable sales price in the first meeting.
High monthly costs
Already in the first meeting, the commission-dependent sales representative presses for the conclusion of a support contract with a term of between 6 and 24 months. The resulting costs quickly add up to several thousand euros per month or several tens of thousands of euros per year. In contrast, concrete measurable results remain absent in most cases.
Some dubious market participants even present profiles of potential buyers to entrepreneurs willing to sell. Subsequently arranged appointments are cancelled a few days before the announced date with the indication that the buyer’s interest has lapsed.
Characteristics of reputable advisors for the sale of businesses
1. initial and follow-up contacts without sales pressure
A serious advisor for the sale or succession of a business always uses the initial contact to analyse the individual situation. At the same time, he presents the consulting and support options without pressure to sell. The focus is exclusively on the entrepreneur’s individual succession situation. Serious advisors subsequently submit a detailed offer adapted to the respective situation and do not push for the conclusion of a contract. Because trust needs time.
2. no fixed-term contracts and no ongoing flat-rate costs
Serious business sales advisors do not earn their money through long contract terms and high monthly flat rates. A clearly defined offer therefore makes it clear what service an entrepreneur willing to sell is paying for. These are a company valuation according to the standards of the Institute of German Certified Public Accountants (IDW-S1), an informative company exposé and support for the entrepreneur in negotiations. Serious advisors for the sale of businesses also work to a large extent on a success-related basis and offset significant parts of the up-front costs against the success commission.
3. BDU membership
Many reputable consultants for the sale of businesses are members of the Federal Association of German Management Consultants (BDU). This means that they are committed to the strict BDU standards of proper succession consulting in their daily work. Integral consultants ? including KERN ? Die Nachfolgespezialisten ? have set themselves even higher standards in some cases. This applies to essential areas such as the protection of personal data of sellers and buyers or the obligation to provide regular training and further education.
4. supraregional networks
The business succession market is characterised by a large number of regional advisors and a few business succession specialists with supra-regional or international networks. These supra-regional networks are becoming increasingly important due to the challenges in finding buyers. KERN - Die Nachfolgespezialisten has offices throughout Germany, Austria and Switzerland and has an extensive international network. In this way, they combine the excellently maintained regional networks to banks, tax consultants, lawyers and associations with the advantages of a supra-regional network. This networking significantly increases the speed of sales processes.
5. process competence
An essential factor for success in the sale of a company or in company succession is a high level of process competence. Many generational changes fail, for example, because they are only thought of on the basis of the tax concept. Therefore, when choosing your companion, make sure that the process of company succession includes all possible stages from comprehensive preparation, selection of interested parties and approaching them to accompanying and moderating the sales negotiations. This is an essential distinguishing and quality feature of reputable advisors for the sale of a business.
6. verifiable references
Ask for references and check them by asking by phone. Neutral evaluation tools such as ProvenExperts will help you select a suitable companion for your company sale. A renowned award, such as the Consulting Prize jointly awarded by Wirtschaftswoche and the BDU, will give you additional orientation. Furthermore, ask regional banks, chambers of commerce and industry or chambers of trade and industry about their experience with consultants in the region.
Questionable providers also often create a large number of positive references on foreign websites whose other contents usually have nothing to do with the topic of business succession. An additional look at the imprint also often reveals more. Often these reference sites are run by private individuals or unknown companies abroad. If there is no imprint, this is always an indication that such sites are most likely purely advertising sites of dubious business brokers.
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Comment: Unresolved company successions endanger our prosperity
Company succession also a topic in the Osnabrück region
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Company successions in East Westphalia and Bielefeld are on the rise
1. No cold calling by unsolicited advertising calls, letters or e-mails. No urging to conclude a contract.
2. a clear offer ensures Cost transparency. No time commitments or recurring high monthly costs.
3. membership in the Federal Association of German Management Consultants (BDU) is a Quality mark for compliance with the highest standards in company sales. Regional partners of Germany’s largest business exchange Nexxt-Change were additionally audited by the Federal Ministry of Economics and Technology and KfW.
4. reputable advisors for the sale of companies have comprehensive process competence. This includes, among other things, preparation, buyer search and negotiation facilitation.
5. well maintained Regional, supraregional and international networks increase the chances of a successful sale.
6. Transaction experience and concrete verifiable references from customers, chambers or banks. Renowned awards provide additional orientation.
