To successfully transfer your business, there are а number of aspects to deal with and steps to take. One of the most difficult is the choice of buyer. How do you find the right person to acquire your business at a fair price and continue developing what you‘ve spent years, or even decades, building up?
Are you thinking of transferring your business, but haven’t yet found the right buyer? Where should you look? How do you approach them and ensure that your exchanges are kept confidential? What information should you share? myLIFE has already discussed how to manage the transfer of your business, so let’s now focus on the choice of buyer and the issue of confidentiality.
Let’s start with some important advice: don’t expect to find a buyer exactly like you! Depending on the type of business being transferred, the buyer may need specific skills, but that doesn’t mean they have to follow your exact way of doing things. A buyer has personal experience, a past, their own aspirations and a vision for the future of the business. So while it’s understandable that you might not want to sell the business to just anyone, bear in mind that no buyer is exactly like you. The best way to consider what’s at stake when choosing a buyer is to understand that you’re selling your past, but the buyer is acquiring their future. The sale can succeed if a bridge can be made between these two radically different perspectives.
The best way to consider what’s at stake when choosing a buyer is to understand that you’re selling your past, but the buyer is acquiring their future.
There are two basic types of buyer, each which has very different goals and motivations:
So who’s likely to acquire your company? There are numerous possibilities.
The ideal buyer may come forward unexpectedly or you may already have identified them in your circle, but it’s also possible that you have no specific buyer in mind. How do I do this?
The larger your network of contacts, the greater your chances of finding the right person. You can tell those around you that you plan to sell your business, talk to trusted professional contacts or simply advertise it in the media or on specialised platforms. The Luxembourg national platform for business transfers, a partnership between the Chamber of Trades, the Chamber of Commerce and the Ministry of the Economy, aims to bring together all offers to transfer or takeover a business across the country. At the same time, be aware that any explicit and visible actions in this regard may frighten clients or employees, and may even whet the appetite of competitors.
It’s always a good idea to talk to intermediaries such as a business lawyer, a notary, your banker or your accountant.
For this reason, it’s always a good idea to talk to intermediaries such as a business lawyer, a notary, your banker or your accountant. They may also put you in touch with potential buyers. For example, your banker may help you find or shortlist several candidates based on financial criteria. Such intermediaries can also accompany you throughout the transaction and manage the wealth aspects in your best interests, taking tax matters into account. Lastly, they provide premises that are a suitable neutral ground for meetings so that talks and negotiations can take place with the discretion required.
Discretion is desirable for talks to proceed with peace of mind, but when certain information needs to be shared confidentiality becomes essential. Before making a decision, a buyer will obviously want to carry out a full audit of your company. For this, they’ll request access to a whole range of information on the company, its operations, financial situation and results, as well as its clients and suppliers.
This data is sensitive and mustn’t fall into the wrong hands. Therefore, all potential buyers should be made to sign a confidentiality agreement covering all discussions and information shared. You can also set up a virtual data room, i.e. a secure virtual space where all the company’s important information can be stored. This space can be set up with varying levels of security, letting you maintain control over the information provided whatever your situation. This can also be done in a physical space, but with much less ease. The advantage of the virtual data room is that you can designate the files that are freely accessible and those that are only accessible to certain profiles. You’ll also be able to track who has consulted what and when.
One final piece of advice: always choose confidentiality and discretion! Transferring a business is already a long and delicate process without having to deal with external disturbances caused by information leaks that are often incomplete or distorted.
One final piece of advice: always choose confidentiality and discretion!
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