The sucess of a company sale depends on many factors.

The sucess of a company sale depends on many factors. (Photo: © Andrea Piacquadio/pexels)

How to sell your company successfully


If internal family succession is not an option, selling the company may make sense as an alternative. To ensure such a project succeeds, many aspects have to be taken into account before implementation.

By Dr Christian Bochmann and Dr Stephan Göckeler

Not infrequently – and this is particularly the case for lift companies – the realisation crystallises in the course of a successful entrepreneurial life that one’s own children cannot, or do not want to, carry on one's life's work. The next idea is then frequently to transfer it to an employee. But for many reasons, this is only rarely realisable – among other things, due to the difficulty for the employee of financing such a model.

But of course it is in the interests of all parties concerned - above all also for the employees and customers - to avoid the break-up of hard-won assets in such cases too. Selling the company is then often the only remaining realistic option. Consequently, in recent years – reinforced by the concentration tendencies observable in this sector - numerous lift companies have been sold. This will probably not be very different in the future either. The success of such a transaction depends on many factors.

Long-term planning

Even if selling the company is very seldom the preferred solution, a farsighted entrepreneur should nevertheless not rule this out categorically in advance. Instead, he should think about his successor at an early stage and also of selling as an option.

For example, he can lay the foundations for the most tax-economical sale possible through the selection of the legal form of the company and company structure. Under current law, selling the company almost tax-free can e.g. be facilitated through the early interposition of a holding GmbH (§ 8b KStG [Corporation Tax Act]). It can also make sense – if the remaining conditions are met – to reduce inheritance tax or if applicable avoid it completely by transferring shares by way of anticipated succession.

Another aspect of advance planning is also to achieve the saleability of the company. Here many aspects play a role, among others, economic ones. Above all, attention should be paid to establishing the autonomy and independence of the company from the entrepreneur in good time.

Specific implemetation

An aspect of advance planning is also to achieve the saleability of the company. Photo: © Natali_Mis/iStockAn aspect of advance planning is also to achieve the saleability of the company. Photo: © Natali_Mis/iStock

Once the entrepreneur has taken the basic decision to sell and specific sales plans exist, careful selection of the advisors is vital. Apart from the regular tax advisor of the company and shareholder, these above all include a lawyer experienced in closing transactions and in many cases also an M&A consultant. He should be well acquainted with the sector and possess a corresponding network. He can then not only guide the process but above all provide support in determining and optimising the price.

Once the right team has been assembled, the planning and implementation can begin. This includes setting up a (virtual) data room with the main documents and other information on the company. This data room later serves those interested in buying as a source of information.

Correspondingly redacting information that is sensitive or which cannot be disclosed on competition or data protection law grounds is critical here. This is particularly vital if the party interested in buying comes from the same sector - which is not uncommon in the lift sector.

A decision must then be taken if only one or several parties interested in buying should be addressed – which often proves to be the version that makes more sense. Normally, a convincing information memorandum is drawn up for this purpose. The parties interested in buying are asked to submit indicative offers on this basis. As a rule, these should include the valuation and purchase price for the company and statements on the intention to carry on the company.

If one or more favourites then emerge, further talks are conducted with them. The end of this phase is very frequently marked by drawing up a letter of intent. Ensuring the confidentiality of the preparations and negotiations is of course also important. Consequently, only a few employees should be made familiar with the plans at an early stage to avoid uncertainties and irritations - especially in the event that selling the company does not succeed.

A standard non-disclosure agreement should be concluded with parties potentially interested in buying, which also provides for a ban on contacting and poaching employees and customers.

The core: The purchase agreement

The purchase agreement is the central, legally-binding element of any company sale. It defines the object of the purchase and transaction structure (especially in tax terms). Specification of the purchase price (also known as equity value) is of especial importance. Particular care is needed here, since errors or misunderstandings could result in direct purchase price losses. Drawing up annual or interim financial statements is frequently used as the basis for calculations here, hence balance sheet aspects are also important.

Moreover, there are protections for the buyer related to the company valuation, e.g. so-called "shrinkage clauses" that are typical for the lift sector. They permit a retrospective correction of the purchase price if the portfolio of maintenance agreements pledged by the seller melts away within a particular period after completion (e.g. six or twelve months).

Photo: © Andrea Piacquadio/pexelsPhoto: © Andrea Piacquadio/pexels

In addition, the conditions under which the transaction is completed are stipulated. This applies above all if approval by the Federal Cartel Office should be required.

The buyer usually insists that its decision to buy and the purchase price are protected by a series of guarantees and exemptions, especially tax exemptions. These are in particular intended to protect against risks from the past, which are to remain in the sphere of the buyer.

The buyer will also require a prohibition of competition as part of the subsequent obligations of the seller covered by the purchase price. For legal reasons, this is normally restricted to two to three years and protects the buyer against the seller establishing a new company soon after the sale and entering into competition with the company sold. The main objective when it comes to the company purchase agreement is avoiding mistakes that could result in retrospective reduction of the purchase price.

The transition

No entrepreneur is interested in his company suffering after the sale. An "after me the deluge" attitude is usually foreign to SME owners. The smoothest transition possible is also very important to the buyer – especially also to the employees and customers. This is because they are the central factors in success, which as far as possible should be preserved when the company is sold.

Therefore, it is frequently the case that the entrepreneur continues to work after the sale usually for a time-limited transitional phase, frequently as consultant. The buyer has a particular responsibility here, since it is its task and also in its interest to integrate the company purchased in its own.

Communicating the sale to employees and customers is another central element in the transition. For reasons of confidentiality, this normally occurs after conclusion of the purchase agreement and is arranged between the buyer and seller.


In summary, selling the company can be a complete success for all parties involved – given proper, farsighted preparation, fair contractual negotiation as equals, a balanced contract, responsible transfer of the company to the buyer and good communication with the workforce and market.

The authors are lawyers and partners in the firm Flick Gocke Schaumburg.
Dr Christian Bochmann specialises in advising family companies and entrepreneur families on all company law questions, including succession planning, from the Hamburg office of the firm. He is the director of the Family Company Centre of the Bucerius Law School and lecturer at the University of Leipzig.
Dr Stephan Göckeler provides advice on all company law matters from the Bonn office of the firm, specialising in M&A transactions, especially in the lift and escalator sector.

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