International consultancy and assistance in the preparation and conduct of business mergers, acquisitions and successions of small to medium-sized businesses
1. Current situation and market:
For over 25 years (1979-2004) Dr. Kanne has been involved as an M&A consultant in numerous international business transactions, either for the seller or for the potential buyer. Furthermore Dr. Kanne has been maintaining long-standing business relations with owners of small to medium-sized businesses who have pending successor problems.
Each year a few thousand companies are brought to new shareholders due to an absence of a successor or because of a restructuring of business or company groups. A lot of big German and foreign investment banks, as well as some business brokers, are focussed on this quite lucrative market segment. In general they act on the basis of exclusive buying and selling mandates and see the transaction through over a few months until the contracts are concluded. The investment banks and business brokers work with professional experts to provide the necessary business analyses and appraisals as well as “candidate screening,” i.e. the internationally orientated search for the best possible potential buyers (or businesses for sale). At an advanced stage of the transaction and in concert with the client external advisors like accountants and specialised lawyers get integrated into the project team headed by the commissioned investment banks and business brokers.
The sale of a company that sometimes has been built up over generations is one of the most delicate steps an owner of a business has to consider if he is not in a position to find a successor within his own family or his personal associates. These businesses for sale often represent the entire estate of the owner. The aim is to maximise the sales value while maintaining discretion. Unfortunately an astonishing amount of mistakes are being made in the process, which result in a reduction of the sales proceeds – as well as in producing needless stress.
However, to make the decision to contact an investment bank or business broker might not be without consequences in the long run. If the owner just wants to “ask around” without a real determination to sell, he may not be taken for serious. When talking about his ideas to people who aren’t professionally discreet he risks that dangerous rumours may be spread in the market. If he does confer a sales mandate he must also be prepared to face the consequences. As soon as the usually exclusive sales mandate is placed – following one or two initial talks, possibly in the scale of a “beauty contest” (a selection process looking for a suitable investment bank or business broker) - a retainer of roughly Euro €10,000 or more per month will arise. Although, in most of the cases these consultation or processing fees will be deducted from the broker’s success fee once the transaction is successfully completed, the owner must be aware of these costs and therefore ought to have chosen the appropriate investment bank or business broker.
2. Services of the F + A Consult GmbH i.L.
Since small and medium-sized businesses do not have the specialised knowledge to deal with selling their own businesses F + A Consult GmbH i.L. offers its experience and expertise as a personal and independent advisor in the initial stages of an actual M&A transaction. An owner considering a sale needs a professional and responsible M&A expert, who knows the business environment, can offer optimum confidentiality (“Banker’s discretion x 2”) and takes most of the stress from the seller in connection with the sale like a “pressure valve.”
F + A Consult GmbH i.L. offers discrete coaching using straightforward costs. Only a few M&A professionals are willing to go through all the pros and cons of a business sale like a “sparring partner” to the owner. The reason being their own budget responsibility and their main objective to secure the sales mandate and its success-related fee coming with it. Dr. Kanne has always fully accepted when an owner contrary to expectations found its own successor and solved his succession problem himself, although the loss of the success-related fee could be quite disappointing.
F + A Consult´s advisory and assistance services include:
- Assistance and support in the selling considerations
- Strategic preparation of the sale
- Help in finding potential buyers
- Selection of appropriate investment banks or business brokers and their teams as well as other advisors (the company’s solicitor or tax consultant are not necessarily the best and most objective advisors because they could have an interest of their own)
- Support with negotiating and conclusion of a mandate contract
- Guidance and supervision of the mandated investment bank or business broker
- In some cases confidential sounding out of potential buyers regarding their philosophy how to manage the acquired business and their planned strategy for the acquisition.
The above-mentioned services are also available cross-border.