Use lower valuations in a company takeover

For many entrepreneurs and the self-employed, a company takeover is very appealing. While you have to set up all the structures yourself when founding a classic company, when you take over a company you can fall back on what is already there and ideally tried and tested and further develop the company with your own business concept and ideas.

It is currently assumed that around 30,000 takeovers per year will take place across all sectors. The orderly handover of one’s own company plays a major role, especially for family businesses and medium-sized companies. The planning for a successful company handover often begins many years before the actual implementation.

Corona pandemic affecting the company takeover process

Now, however, the corona pandemic is also having an impact on takeover processes and is speeding them up considerably in some cases. Potential buyers are initially faced with the same questions as in previous years:

  • Is the business model viable in the future?
  • What are the internal structures and processes in the company like?
  • What contracts exist with customers and suppliers, is it possible and sensible to adopt them?
  • Who are the shareholders in the company?
  • Is there an official company valuation, what went into it and can the purchase price be estimated as realistic?

In the past few months, many business models have shown that extensive restructuring and reorganization measures are necessary to ensure the future viability of the business model. In particular, the digitization of value chains, the streamlining of internal processes or the rethinking of the previous supplier structure are examples.

Business takeover as great opportunities

Now this offers great opportunities for a potential company takeover. A company in difficulty naturally has a significantly lower company value than an economically healthy company and can therefore represent an attractive option. However, it must be checked whether the company can still operate without a pandemic, e.g. B. would have had to record a significant drop in sales and would have gotten into troubled waters even without changed framework conditions. Examples of this would be management errors, a product portfolio that is unattractive for the customer target group or the accumulation of too high long-term fixed costs that can no longer be served with the current business model. In general, it is also important to put the performance of the company in relation to the development of the market in which the company is active. For this one can fall back on common industry reports or forecasts.

Bringing your own strengths to bear in a company takeover

Regardless of the company valuation or the purchase price of a company, you should think about the extent to which you can contribute yourself to the previous company in a promising way. A price that appears cheap can initially be very attractive for an early company succession, but you should approach the forecast for the next few years with reason and a realistic calculation:

  • How can the product portfolio be sensibly supplemented or streamlined?
  • Can higher prices be enforced on the market?
  • Is it possible to address and win over new target groups with an SEO-optimized marketing strategy? (Service tip: Analysis of the structure and SEO performance of your website)
  • Are there sustainable synergy effects with your own network that the future entrepreneur can contribute?
  • Can the business model be digitized?
  • Can the business model be internationalized?

It is particularly important to pay attention to how great the potential of the existing structures and the new and optimized orientation can be estimated for the future. Ideally, this can be measured using key business figures such as sales (per employee), concrete savings potential, e.g. B. through synergy effects and ultimately the EBIT, i.e. the annual profit before taxes, for the next few years. A deeper look into the business plan, if created, can also be worthwhile here. In addition, the industry experience of the new owner and the current and future workforce also play a major role.

In the case of a company takeover, a large number of individual building blocks must be taken into account, which must be sensibly lined up.

Would you like to sell your company or become self-employed as part of a company takeover? Then you can take advantage of state-funded management consultancy and get professional support in this important process. Simply fill out the funding check and benefit from our know-how.