Trends Family Business – Pay attention to the other party
18 March 2020
A brief article about two of the key factors leading to the successful transmission of a family business was written by Johan Hatert, Partner BDO Corporate Finance, and published in the February 2020 edition of Trends’ Family Business periodical.
The article discusses the understanding of the counterparty’s needs and standpoint, as well as an in-depth preparation and presentation work about both the quantitative and qualitative indicators of the company, as two of the key factors leading to a successful transmission.
First, it is essential for the seller to try to “walk a mile in the shoes” of the potential buyer. As a buyer, what would you like to see ? Obviously, the company’s financial statements should be understandable and reflect the economic profitability of the company. As a buyer, unclear financial reporting about a target company would look suspicious. You would then seek to save yourself a safety margin by reducing the valuation or by asking for additional warranties.
As a prerequisite to the start of any negotiation, one should therefore ensure that the accounts clearly reflect the economic reality of the company. Besides, the entrepreneur who sells his business should also actively demonstrate the future potential of the activity of the company with both financial and extra-financial indicators. A considerable preparatory work which should not be neglected when contemplating the sale of a company.
The complete article is available on the Trends Family Business website (French version and Dutch version).