Company sale

The first and most important step in selling a company or executing an M&A transaction is to clearly define the main strategic goal and identify the possible alternatives for achieving it.

At the start of the process, one basic question must be answered:

What is the main interest of the owners or transaction participants?

The answer drives:

• the type of investor,
• the way the transaction is executed,
• the geographical focus,
• the size and profile of suitable candidates,
• and the structure of the transaction itself.

The goal of the transaction can be, for example:

• merging two comparably sized companies to create a stronger economic entity,
• capturing synergies through integration of production, distribution, technology or customer base,
• bringing in a strategic investor to develop the company,
• a full takeover by a new owner,
• preserving the standalone operations of the acquired company,
• integrating the acquired company into the investor's existing structure,
• acquiring specific assets, know-how, employees or commercial relationships,
• generational change of owners or founder exit.

In some cases the investor may only want to acquire:

• the business or a part of it,
• a production division,
• a brand,
• technology,
• a distribution network,
• or specific assets without acquiring the company itself.

Based on the defined goal, a list of possible transaction forms must be prepared. The most common ones are:

• merger of companies,
• purchase of an ownership interest or shares,
• sale of the business or a part of it,
• asset deal – purchase of selected assets,
• capital investor entry,
• joint venture,
• management buy-out or buy-in,
• gradual acquisition of an ownership interest.

Each of these alternatives has different:

• legal,
• tax,
• financial,
• accounting,
• and operational implications.

After defining the transaction goal, the next step is identifying suitable candidates. This process must consider several factors that significantly influence the success of the transaction.

1. Financial fit of the investor

One of the most important criteria is the investor's ability to finance the transaction. We assess in particular:

• size of the investment capital,
• availability of external financing,
• ability to finance further development of the company,
• stability of the investor,
• track record of completed transactions,
• level of indebtedness of the investor.

The aim is to identify candidates who:

• have sufficient financial resources,
• have experience with similar transactions,
• and are able to ensure long-term stability of the company after the acquisition.

2. Proximity or compatibility of business activities

Industry and sector proximity of the investor to the target company is also important. Preferred investors are those:

• operating in the same industry,
• with a similar business model,
• or with activities that naturally complement each other.

Such a fit often brings:

• synergies,
• cost savings,
• expansion of the customer base,
• more efficient use of production or logistics capacity,
• access to new technologies or markets.

3. Size compatibility of the entities

When selecting a suitable buyer, the size compatibility of the companies must also be considered. For example, we compare:

• turnover,
• EBITDA,
• number of employees,
• asset value,
• geographic scope of operations.

Too great a difference between companies can lead to:

• integration problems,
• different corporate culture,
• inefficient management after the transaction,
• or low investor interest.

4. Overlap or complementarity of business activities

The degree of overlap or complementarity of business activities is also important. Investors often look for companies that:

• extend their product portfolio,
• complement distribution channels,
• enable vertical integration,
• or create new business opportunities.

This could be, for example:

• a manufacturer and a distributor,
• a logistics company and a manufacturer,
• a technology firm and a sales network,
• or regionally complementary companies.

5. Geographic perspective

The geographical suitability of the transaction must also be assessed. We consider in particular:

• country of the investor's operations,
• knowledge of the local market,
• regulatory environment,
• logistical accessibility,
• language and cultural aspects,
• strategic development plans of the investor.

Many transactions are driven specifically by:

• entry into a new market,
• expansion into a region,
• or building a regional platform.

In Central Europe, the synergy potential of the V4 countries also plays a significant role.

After evaluating all the above factors, the result should be:

• a list of strategic investors,
• financial investors,
• private equity funds,
• or synergy partners,

who:

• meet the financial criteria,
• have a suitable sector focus,
• possess the necessary know-how,
• and are able to execute the transaction in line with the seller's goals.