Thorough Preparation

It's important to create a company profile that highlights your company's strengths and weaknesses alike. This should include the following points:

  • company type
  • activities
  • reason for sale
  • regional information
  • turnover and profit
  • adviser's contact details

Send this profile to potential buyers or post it to one of several databases listing businesses available for takeover. It's sensible to hire an adviser who can help you determine your business' value.

It's also very important to clarify exactly what is for sale, e.g. the entire company and its legal entity (BV) or just part(s) of the company. Obviously, you're also looking to get a good price for your business. To prepare yourself properly, make sure you've also arranged the following matters:

  • Up-to-date accounting records so that you can respond immediately to any requests from potential buyers for turnover figures.
  • Often, you're your company's shop window. If you've got employees, make sure they're capable of working independently and autonomously, i.e. they're not dependent on you and you alone. This will make your business a more attractive proposition for potential buyers.

Business Valuation

There are several ways to determine the value of your business. These are generally based on your company's financial figures, as well as other aspects such as goodwill.

The value you calculate isn't necessarily the price you'll end up agreeing with the buyer. Ultimately, the price depends on the outcome of negotiations between you and the buyer, as well as some of the following factors:

  • reasons for selling/buying
  • negotiation tactics and skills
  • buyer's/seller's alternatives
  • possible synergies
  • payment method

During negotiations, try to view things from your potential buyer's point of view. What are the benefits to the buyer? What does he/she want to pay for your company? An external adviser may be able to help you value your business properly and inform you about the pros and cons of various calculation methods.

Potential Buyers

Who's the best buyer? The answer to this question depends on your requirements. Perhaps you're looking for someone you know well or someone who has an affinity with your company, e.g. an employee or a family member. Perhaps you're just looking for the best price possible or an unknown strategic buyer.

Make a comprehensive list of potential buyers. Doing so will give you a better picture of who they may be. Use your own network when making the list and include suppliers, customers and private individuals. Information may also be available from trade associations, your bank or specialist business brokers. Select the most suitable candidate based on your profile.

Approach these candidates, preferably via an intermediary. Depending on how sensitive or confidential your company's information is, you could alternatively opt to provide a comprehensive sales memorandum, an anonymous company profile or even a verbal account. Use a non-disclosure agreement (NDA) if you want to prevent sensitive information from leaking out.

Legal Aspects

Selling your business involves fulfilling a whole host of obligations. You may have to reduce your selling price if you fail to follow the correct procedures or meet predefined criteria. In extreme cases, the sale may even fall through. For example, if due diligence results in a negative outcome, you may have to renegotiate on price. This is just one reason why we recommend that you hire a legal adviser.

Buyers may request that due diligence be performed before both parties sign a contract. The due diligence process is intended as verification of your figures, prognoses and assumptions. It gives the buyer greater insight into the company's customers and contracts. You're obliged to provide complete and accurate information as part of this process.

The sale is only final once both parties have signed the purchase contract. Depending on your company's legal form, you may have to call on a civil-law notary.

Tax and Customs Administration

Part of selling your business involves settling up with the Tax and Customs Administration [Dutch: Belastingdienst]. How you settle depends on your company's legal form.

The same tax rules apply when selling a sole proprietorship [Dutch: eenmanszaak] or a share in a general partnership [Dutch: vennootschap onder firma (VOF)] as apply when closing down.

You'll have to calculate the cessation profit [Dutch: stakingswinst] and pay income tax on this amount. In some situations, you may be eligible for discontinuation relief [Dutch: stakingsaftrek]. You'll also have to settle your tax-deferred retirement reserve [Dutch: Fiscale Oudedagsreserve (FOR)].

Your accountant or tax specialist will be able to advise you about more complex situations.

Other rules apply if you're selling a private limited or public company [Dutch: besloten vennootschap (BV) / naamloze vennootschap (NV)]. Different taxes are payable depending on your company's legal structure.

For example, you'll be liable for income tax if you're selling personally held company shares. But if you're selling shares held by a holding or management company, then other rules apply! Your accountant or tax specialist will be able to advise you about more complex situations.

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