Goals & Planning
Goals may range from deal to deal, but for simplicity’s sake they’re divided into personal & tax-related ones. Fulfilling personal goals involves freeing up capital so you can concentrate on gaining expected proceeds, while fulfilling tax ones requires ensuring that the deal is in line with your plan.
From a planning perspective, you need to set aside enough time to get your business ready to enter a market. Preparing for & executing a sales deal in the EU can take up to 12 months or more, especially if it’s sold via an auction. The actual sale process, including negotiating with a preferred buyer and closing a sales deal in the EU, often takes up to half of that time.
Selling a business in Europe is a very complex process requiring directors & stakeholders to spend a significant amount of time & effort. You must minimize potential risks by making sure that all stakeholders work together & a deadline for selling a company in Europe is met.
It makes sense to search for information on deals & prices in your industry. Your senior management, personnel, IP & customer database are probably your most valuable assets. However, buyers may value these core assets in different ways: financial ones may value your senior management more than industrial ones who already have their own team of senior managers.
Normally, problems that arise in the process of selling a target company in the EU are so complex that their handling may require hiring professional consultants (e.g. lawyers & accountants). An experienced lawyer will make sure that all legal requirements are met & advise you on the most suitable terms for your type of transaction. An accountant can help you deal with taxes and other financial issues that may arise.
Potential buyers are usually divided into two categories:
- industry (or "strategic") ones;
- financial ones (e.g. PEFs).
Industry buyers generally seek to expand their existing business by acquiring, for example, capital assets. In contrast, financial buyers tend to target companies that will generate the desired level of profit within a fixed investment horizon (e.g. 5 years).
The corporate structure of your company may not be optimal for conducting in the EU an M&A transaction today. When analyzing the pros and cons of your corporate structure, you should pay attention to the following important aspects:
- applicable regulations;
- 3rd party consent;
- shareholder approval thresholds.
You should also discuss all the above aspects with your consultants & potential buyers.
Once you've made up your mind to sell a business in the EU, your next step should be to validate your business model. We advise you to hire professional consultants who can advise you on DD of a target company in the EU & many other aspects. IQ Decision UK has a team of experts who can provide you with assistance in preparing a sales contract in Europe & concluding an M&A deal in the EU.