The sale of a company is more than just a financial transaction. It marks the end of one chapter and the beginning of a new stage of life for owners. In Switzerland, a country with a strong economy and many small and medium-sized enterprises, selling a company is a carefully considered decision that takes numerous factors into account.
Often it is not enough to simply achieve the best price; many sellers also want their life’s work to pass into good hands and be successfully continued. That’s why it is important to approach the sale strategically and start planning early. A structured approach helps to avoid typical mistakes and maximize the value of the company.
With clearly defined goals and long-term planning, the foundation for a successful company sale has been laid. The next step is to look more closely at the individual phases of this demanding process.
Phase 1: Planning and defining objectives
Before the sales process begins, it is important to define clear objectives and create a long-term plan. The question “Why do I want to sell my company?” is central here. Are there personal reasons such as the desire for a new challenge, health aspects or reaching retirement age? Or are there strategic considerations such as a changed market position or an attractive takeover offer?
Setting clear objectives
Consider which aspects are particularly important to you. The following points may play a role:
- Purchase price and financial goals: Do you want to achieve a specific sale proceeds to secure your standard of living or to invest in a new project?
- Continuation of the company: Is it important to you that the company name and employee structure are preserved?
- Succession and handover: Would you like to accompany a gradual handover or complete the sale quickly?
A detailed definition of objectives is crucial in order to set the right priorities during the sales process and work towards a successful transfer.
Early planning
Selling a company is not a short-term project. As a rule, entrepreneurs should start preparations at least three to five years before the planned sale. This period allows you to put the company in a stable position and fix any weaknesses before potential buyers evaluate the business. Tax optimizations can also be implemented in good time in order to maximize the sale proceeds.
Starting planning early also gives you the flexibility to choose the timing of the sale strategically and wait for a favorable market phase. Particularly in Switzerland, it can be worthwhile to factor tax advantages into your considerations. For example, it may be possible to transfer non-essential business assets from the company into private assets, which can provide tax benefits. A professional tax ruling from the cantonal authorities gives you a certain degree of security and minimizes future uncertainties.
With clear objectives and a long-term plan, you create the basis for a successful company sale that meets both your financial and personal expectations.
Phase 2: Company valuation
A well-founded company valuation forms the foundation of a successful sale. Potential buyers want to know precisely what the company is worth and what return they can expect. It is therefore crucial to assess the market value realistically and carry out a transparent, comprehensible valuation.
Methods for valuing a company
In Switzerland, two approaches are frequently used for valuation:
- Income value method: This method calculates the company’s value based on the future profits that the company can generate. The expected profit is multiplied by a capitalization factor that takes into account, among other things, market risks and capital requirements.
- Discounted cash flow method (DCF): Here, the company’s value is determined by the present value of the expected future cash flows. These cash flows are discounted using an interest rate that also reflects market risks and financing costs.
Both methods help to determine the company’s actual value in an objective way, which facilitates realistic pricing and strengthens the negotiation position. Entrepreneurs often overestimate the value of their company due to emotional ties. It can therefore be sensible to involve external advisors such as M&A specialists or auditors to ensure a neutral and well-founded valuation.
Market analysis and price determination
In addition to the valuation method, the current market situation also plays a role. A detailed look at comparable transactions and the economic environment provides insight into how much buyers are actually willing to pay. It can be advantageous to carry out a market analysis early on in order to support price determination. Factors such as the competitive landscape, the general economic climate and specific industry developments should be included in the analysis to determine the optimal sale price.
By carrying out a careful valuation and a sound market analysis, you create the conditions for a smooth sales process that takes into account both the seller’s interests and the expectations of potential buyers.
Phase 3: Buyer search and market outreach
A crucial step in the sales process is the targeted search for suitable buyers. The success of a company sale depends largely on whether you find a buyer who is a good fit for your company not only financially, but also strategically. Broad market outreach increases the chances of finding the ideal successor and achieving an optimal price.
Channels for finding buyers
To reach a diverse pool of potential buyers, you should use different channels:
- Professional networks and platforms: In Switzerland, entrepreneurs have access to specialized platforms that discreetly and anonymously handle buyer searches. These platforms offer access to a broad network and enable targeted outreach to interested parties.
- Professional advisors and intermediaries: M&A advisors or succession specialists have extensive networks and market knowledge. They can professionally manage and support the sales process by identifying and contacting suitable potential buyers.
- Discreet public communication: In addition to classic networks, anonymous listings on online portals may also be an option. Word of mouth as well as approaching companies that wish to expand their business scope can also be effective.
Anonymity and discretion
When searching for buyers, discretion is often decisive. The sales process should be structured so that information is only disclosed after a confidentiality agreement (non-disclosure agreement) has been signed. This protects both your employees and the company from potential uncertainties. A professional intermediary can manage communications and ensure that potential buyers are approached in a targeted manner without jeopardizing your company’s market position.
Requirements for potential buyers
Not every interested party is the right buyer for your company. Before entering into negotiations, it is advisable to draw up a list of requirements that a buyer should meet. This could include:
- Financial resources: Check whether the buyer has sufficient capital to finance the purchase price.
- Professional and strategic suitability: A buyer who understands the industry and has a clear vision for the company’s future is usually the better choice.
- Long-term interests: Consider whether the buyer intends to operate and further develop the company in the long term, or whether a short-term gain may be the main focus.
Through a targeted and careful search for buyers, you can not only achieve the best possible sale price, but also ensure that your company passes into good hands and is successfully continued.
Phase 4: Negotiation and due diligence
In the negotiation phase, the course is set for the successful completion of the company sale. At this stage, it is important to clearly represent your own interests and at the same time create a win-win situation for both parties. The due diligence review is a central element to ensure that buyer and seller share a common understanding of the company’s condition and value.
Negotiation strategies
Good preparation is also essential for conducting negotiations. In this phase you should:
- Define your minimum requirements and negotiation goals: Determine in advance which aspects are non-negotiable for you and where you are prepared to compromise.
- Have alternatives and comparison offers ready: Negotiating with several interested parties in parallel can help you achieve a stronger negotiating position. It is advisable to keep several potential buyers in conversation at the same time to keep your options open.
- Use professional support: Support from experienced advisors can be highly beneficial, as they bring not only expertise but also emotional distance. Intermediaries can moderate the negotiation process objectively and ensure that both financial and strategic interests are adequately considered.
Due diligence: Reviewing the company
The due diligence review is a key step in the sales process, during which potential buyers examine the company in detail. The goal is to identify possible risks and hidden issues that could affect the purchase price or the decision to buy. An important part of this review is checking the entries in the Commercial Register, to ensure that all company data is correct and that there are no legal uncertainties. It is checked whether the information in the Commercial Register matches the information provided by the seller.
As part of the due diligence review, various aspects of the company are examined, including:
- Financial documents: All relevant documents, such as annual financial statements, tax records and current balance sheets, are analyzed in detail.
- Legal matters: Contracts, liabilities and existing obligations are examined for potential risks.
- Operational processes and business model: The buyer evaluates how well the company is set up operationally and whether the business processes are efficient and sustainable.“
It is advisable to prepare all relevant documents at an early stage and to anticipate possible questions in advance. A well-structured and transparent due diligence process strengthens trust and increases the chances of a successful closing. In addition, you can minimize uncertainties for buyers and pave the way for smooth contract negotiations.
The negotiation and due diligence phase is the moment when it is decided whether the sale can be carried out as planned. Thorough preparation and support from professionals are the key to a successful closing.
Phase 5: Signing the contract and transfer of ownership
After successful negotiations and a satisfactory due diligence review, the final step in the sales process follows: signing the contract and transferring ownership. In this phase, the legal and financial details are finalized and recorded in order to complete the sale in a binding manner and officially transfer the company.
Drafting and reviewing the purchase agreement
The purchase agreement is the central document of the sales process in which all essential terms of the transaction are recorded. Particular attention should be paid to the following points:
- Purchase price and payment terms: The exact purchase price, payment terms and any installment payments should be clearly defined. This may also include elements such as an earn-out agreement, in which the final purchase price depends on the company’s future performance.
- Warranties and liability: To avoid potential disputes later, it is important to provide warranties regarding the condition of the company. This includes representations about the state of finances, assets and potential liabilities. Exclusions and limitations of liability for the seller can also be stipulated.
- Handover arrangements and post-deal support: It should be defined in detail how the transfer of the company will be carried out and whether the seller will remain on hand in an advisory capacity in the first few months after the sale. Such arrangements can help ensure a smooth transition and strengthen the new owners’ confidence.
Tax optimization
In a company sale, tax optimization plays a central role, as it can have a significant impact on the net proceeds. In Switzerland, there are various ways to minimize the tax burden:
- Capital gains and social security obligations: Depending on the company’s legal form, capital gains are often tax free, as is the case with the sale of corporations (AG). In the case of sole proprietorships, however, parts of the sale proceeds are often subject to social security contributions.
- Structuring the sale as a share deal or asset deal: In a share deal, shares in the company are sold and the buyer assumes existing liabilities, whereas in an asset deal, only selected assets can be transferred. Each of these structures has different tax implications that should be carefully weighed.
Working with an experienced tax advisor or an interim CFO is essential to find the optimal structure for the sales process and avoid tax disadvantages. Depending on the individual situation, it may also be worthwhile to obtain a tax ruling from the competent cantonal tax authority in order to gain clarity in advance about the tax consequences of the sale.
Transfer of the company
The final step is the formal transfer of the company to the new owners. All legal documents are signed and ownership is transferred. Depending on the agreement, an accompanying transition phase may be useful in which the seller remains active in an advisory role and helps the new owners find their way around the company.
A well-prepared and thoroughly structured contract signing is the key to completing the sale of the company successfully and in a legally secure manner. This ensures that the buyer takes over a functioning business and the seller achieves their financial and personal goals.
Common mistakes and tips on how to avoid them
Selling a company is a complex process that requires careful planning and precise execution. In practice, however, there are typical mistakes that can complicate the sales process and reduce the sale proceeds. Below you will find the most common pitfalls and proven tips for avoiding them.
1. Time pressure and inadequate preparation
Many entrepreneurs start the sales process only when the sale is supposed to be completed in the near future. Such an approach often leads to a sale under time pressure, which weakens the negotiating position and results in compromises regarding price and the choice of buyer.
Tip: Start planning early and bring in professional advisors who will guide you through the entire process and point out potential tax advantages.
2. Unrealistic price expectations
Emotional ties often cause entrepreneurs to overestimate the value of their company. An excessive price can deter potential buyers and lead to long sales periods during which the company may lose value.
Tip: Work with experts to carry out an objective and market-appropriate valuation. Also include the buyers’ perspective in your considerations and check whether your price expectations are supported by comparable market transactions.
3. Inadequate buyer screening
It is not only important to find buyers, but also to ensure that they have the necessary financial resources and professional competence to successfully continue the business. Inadequate screening of interested parties can lead to problems after the sale and jeopardize the company’s continued existence.
Tip: Draw up a catalogue of requirements for potential buyers in advance and conduct a thorough due diligence review. This way you can ensure that the takeover is carried out by a suitable buyer.
4. Lack of confidentiality and discretion
Uncontrolled information about the planned sale can create uncertainty among employees, customers and suppliers. This can destabilize operations and scare off potential buyers.
Tip: Keep the sales process confidential and only disclose information after a confidentiality agreement has been signed. Work closely with intermediaries and advisors who understand the need for discretion and manage the sales process accordingly.