The reasons for this new step in your life - which will impact not only your own life but also your environment -  can vary and have personal (e.g. takeover of a family business, the desire to become your own boss, …) or professional background (a project of developing your own business project based on an existing activity).

Whatever the reason is, the takeover of a company needs a thorough preparation.

Before starting your business, it is important that:

  • Your objectives are clear,
  • You know the strong and weak points of the business,
  • You project yourself as a future business owner.

5 important steps for a successful takeover:

1. Prepare your project

The preparation phase is important to map out your project. To prepare a successful takeover, your thoughts should take into account your experience, your education, your trumps, your limits, your capacity of investment.

The most important questions you need to ask yourself:
•    What exactly is my project?
•    What are my goals?

Further questions will allow you to fine-tune your project and to define the profile of the company you are looking for:
•    Type of activity segment?
•    Size of the company?
•    Acquisition cost?
•    Where?

From the early beginning it is important to know if you want to start alone or take someone on board with you. If you plan to invest with other partners, the expectations, capacities and future roles of each party should be very clear from the start.
Pay attention to the prioritisation of your objectives: the ideal company does not exist!  So it is important to know what factors are decisive for you.If not, you might lose a lot of time and jeopardize the success of your project.

To find the project that will encourage you to start, you can call on an economic actor who may happen to know about targets, such as accountants, notaries, real estate agents, the chamber of commerce, banks or professional organisations.

There are also publications that specialise in ads for takeover targets.

A quick search on the Internet can also lead you to some websites where you can use filters to find targets. Some websites allow to make a selection by region, industry, turnover, acquisition value, …  Other websites allow to make a selection based upon criteria of personal contribution, retail floor space, …

In order to have a first indication on the performances of the company, you can consult the annual accounts via the website of the National Bank of Belgium.

After this identification phase, you can also contact the target’s business owner to meet him and have a more precise idea about the company, namely the functioning of the company as a whole, the organisation, the employees, the financials, …..

Meet with the seller of the business, several times if necessary: these meetings between seller and buyer should take place under optimum conditions.
Introduce yourself and your project during the first meeting. The more detailed and tangible your project is, the more the seller will be motivated to know more about it and the more you will build trust.
An acquisition is much more than just a matter of figures, it also is a transmission of knowledge between two people. It is an act of seduction and a trusting relationship needs to be built: you have to convince the seller that your project is the best project for him.

You should also try to discover the seller’s motivation, try to understand what exactly he is selling and within what period:    

  • Does he have urgent obligations, is there a deadline he needs to respect?
  • Was the company placed in a solvency safeguard procedure?
  • Does the seller plan to retire?
  • Does the seller plan to start a new activity?

If he has a company, you should ask the terms and conditions of sale: is the seller selling the activity or the shares? ...

The company’s operational aspects should also be examined:

  • the activity,
  • the staff,
  • the operating assets,
  • the legal context (contracts, obligations, ...)
  • the economic and financial situation.

Note that the first meeting is not the best time to talk about money. It is recommended that you first listen to each other so that each one can strengthen his intentions.
Ask for documentation and information that will allow you to make a deeper analysis of the target, such as:

  • The annual accounts of the 3 last financial years,
  • The bylaws,
  • The lease contracts and other agreements,
  • A detailed list of the staff (with, at least, for each employee his function, salary, seniority, specific benefits, ...)

Before handing over this documentation, the seller may require that you sign a non-disclosure and confidentiality agreement.

Analyse the company: diagnose the strengths and weaknesses on the basis of the documents and information you received:

  • What is the company’s financial situation?
  • What are the company’s contractual obligations (agreements, lease contract, ...)?
  • What are the company’s debts?
  • What investment capacity does the company have in the short, medium or long term?
  • Who are the suppliers?
  • What is the client typology? Are the clients loyal?
  • Does the company have a strong commercial dynamics?
  • How is the company organised internally with regards to your project?
  • What human and material resources does the company have?

Do not forget to carry out a social audit of the company, in order to check if the current HR management fits your project:

  • Compliance of internal practices (labour legislation, collective agreements, ...),
  • Identification of the risks and their social and financial consequences,
  • Social climate,
  • Quality of the internal information within the company,
  • Structure of the teams,
  • Profile and skills of the employees, ...

Do not hesitate to ask FIDUCIAL and FIDUCIAL Tax & Legal Consulting for assistance: our accountants and legal advisors can help you in the financial and social analysis of your target. They have a critical and professional ability to analyse the important issues in the company, to perform the right valuation of the company and to identify potential risks.

Do not forget to question yourself after this analysis: does the target finally allow you to realise your project and did you identify the right target?

Determine the company’s value and the price you are ready to pay:
The valuation is based upon the company’s economic and financial information as well as on the analysis of its strengths and weaknesses.
Your accountant can prepare this valuation and can examine the feasibility of your project based on a business plan and a financial plan.
Drafting a business plan allows to assess the company’s future means and to make a forecast of the activity and the results that can arise from them.

The financial plan allows you in the same time to examine how the acquisition can be financed:

  • What resources does the project require in short, medium and long term?
  • What funding is scheduled?
  • Do you provide a personal contribution?
  • What additional financial resources do you need compared to your personal contribution?
  • Are there any investment aids or grants available?

As soon as you have drafted the business plan and the financial plan, it will be easier to step to the banks and to convince them of the funding you need to obtain from them.

FIDUCIAL is there to assist you in every way with your business plan and/or financial plan.

The negotiations do not only concern the price but also the provision of clauses such as a liabilities guarantee clause, a non-competition clause, ...

Several modalities also need to be introduced:

  • What terms of payment are expected?
  • What social and legal statute are you going to choose?
  • What formalities need to be accomplished?
  • What legal documents need to be drafted?

All these questions are delicate issues, that may have an important financial impact. Do not hesitate to contact a FIDUCIAL accountant or tax & legal advisor to have all required information and find assistance during the deal so that you can negotiate under the best possible terms.

At the end of the negotiations, it is time to draft a memorandum of understanding and the legal documents for the take-over, and to fulfil the different legal and administrative formalities (registrations, publication, ...).

After the closure the time has come to become the managing director of the company and to ensure a smooth transition, especially for the employees.

To ensure a smooth transition and to exceed certain indicator thresholds, it is important that you reassure the employees in order to have a close team that will be the richness of the company.

Do certainly not neglect this last step because the success of the takeover will be attributable to the quality of the transmission. One of the most important keys is the comprehension of the existing operational rules, so that you can examine how to optimise them and unite the employees around the project.

Important: your staff will have a lot of questions and it is important that you spend a lot of time to explain your project and your objectives so that each employee can find his/her place in the organisation. Don’t hesitate to organise several meetings during your first weeks as managing director, it will contribute to creating a climate of confidence and mobilising the staff around your project.

Your suppliers and clients also need to be comforted, they need to feel your motivation and your capacity to take over the reins and your capacity to look forward to a dynamic and clear future.

You should give yourself the resources to reassure yourself too:

  • Provide an adapted administrative and accounting organisation and establish management indicators with the help from your accountant,
  • Manage your social obligations with your accountant’s and legal advisor’s assistance,
  • Entrust your legal formalities to your legal advisor.

Your FIDUCIAL accountant and FIDUCIAL Tax & Legal Consulting legal advisor continue to stand by your side now that your project has become reality.