Acquisitions: finding a real gem

It is difficult to flush out the right deal from among thousands of companies for sale. You must also identify what you are looking for and where to look.

The following questions will help you target your approach.

To which sector should the company belong?

The easiest route is to pick the sector in which you have already been able to acquire some experience. This means, above all, checking that the necessary personal conditions are present: assessment of ability, qualifications and authorizations. For some companies, such as training companies, specific professional knowledge is not necessarily required, or it is possible to acquire this knowledge quite quickly.

To which regions should you limit your search?

The answer will depend on the candidate’s level of mobility. Are they prepared possibly to move house? The greater their mobility, the greater the chance of finding the right company.

What equity should be contributed to the acquisition of a company?

An attractive company has its price. This means respecting the general rule that you need to have between 30% and 50% of the purchase price in the form of equity. You also need to allow for a reserve for any additional calls on funds. You must never include your old-age insurance capital, and you should discuss financing risks with your family and, above all, your partner.

What size should the company be?

This issue is closely linked to the question of financing. It also depends on the director’s abilities and on he or she being prepared to handle entrepreneurial questions in the primary business and more or less intensively. If, in addition to the director’s work, the buyer also wants to collaborate professionally within the company, a business with 150 employees will, as a general rule, be too large for such plans.

Where can you find a suitable company?

There are no “official" company markets. Various organizations, however, have devoted themselves to this area, such as the platform Companymarket.ch, which helps entrepreneurs find interesting offers and post ads. SME markets are governed by the foundation KMU Next for German-speaking Switzerland and Relève PME for French-speaking Switzerland. These are initiatives funded by private individuals collaborating with economic, federal and cantonal economic promotion agencies.

In addition, many private institutions and brokers are prepared, in the context of a mandate, to find or sell the right company for consideration.

Is the company really “the right one”?

After pre-selecting a company, you need to ask the question: is it really the right one? The person handing over their business often provides a very positive description of the company or moderates the risks and fears. For this reason, working with your own experts, it is necessary to carry out in-depth due diligence (a detailed audit of the company) as well as your own estimate of the value of the company. Using these methods, any risks and potential incorrect estimates will be detected in time and capital requirements will be correctly estimated, while lengthy and costly contractual negotiations will be conducted effectively or can even be avoided in some cases.


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Last modification 21.08.2018

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