How to value my company?
In most cases the value of a company is calculated by multiplying its result (EBITDA, EBIT, Profit after tax) by a multiple. This multiple is derived from the company's sector, past and future performance, growth, strategy, and market position. Furthermore, other subjective factors such as brand value or the quality of management are also considered.
It is also possible to estimate the value of a company according to its business plan: this is called Discounted Cash Flows (DCF) valuation. This method also takes into account the net financial debt of the company at the time of the valuation.
Finally, for certain specific cases, such as real estate firms, loss-making companies or companies with no activity, the valuation can be carried out by determining the net asset value (NAV), which corresponds to the sum of the assets (possibly revalued at market value) minus the sum of the liabilities (liquidation value).
How to sell my company?
The sale of a company is an operation that can be complex: valuation, screening of buyers, approach, negotiation. It is recommended to seek the advice of an expert to accompany the transaction and maximize its chances of success.
This adviser will proceed according to the following steps:
Preparation of the transaction: preparation of a business plan, valuation, creation of an information memorandum, determination of the selling strategy, etc.
Research and approach: setting up a list of potential buyers to be approached (initially on an anonymous basis).
Indicative offers: a potential buyer always presents a "non-binding" offer. This offer will have to be confirmed after the due-diligence process.
Due diligence: during this phase, the purchaser who has submitted a non-binding offer has access to the target's data (e.g., financial, legal, and fiscal aspects), which will enable the purchaser to confirm or modify his offer.
Negotiations and finalization: assisted by a business lawyer and a financial advisor, each party negotiates an assignment contract that will determine the terms of the transfer; payment of the price, liability guarantees, transition phase.
Why sell my company?
For any entrepreneur, it is always a difficult decision to sell his/her business. However, entering a selling process can solve problems of succession (the entrepreneur is no longer of age to run his company), enhance growth (integration into a large group or the entry of an investment fund can support the growth of the company with superior financing capabilities), or allow to benefit from opportunities (as the M&A market is particularly dynamic, it is not uncommon for entrepreneurs to receive spontaneous offers).
Why call an advisor to sell your company?
The selling process is quite complex and time-consuming for the entrepreneurs and the management. That is why it is recommended to call an advisor. This allows to benefit from the advisor’s experience in the conduct of these operations but also to relieve the management who must continue to manage and develop the company in addition to the selling process. Also, an advisor will have a less emotional approach and will generally be able to obtain the best terms and conditions for the sale.