Successful Business Transfer: The Four-Leaf Clover

More than 58,000 SME leaders in Flanders are over 55 years old and will soon retire, transferring their businesses. Less than half expect a family transfer. Thus, many companies and businesses will enter the market. (Source: Business Transfer in Flanders 2019)

The Market Recovers

After delaying some transactions in 2020 due to COVID-19 measures, the takeover market has seen a remarkable recovery since 2021. For a budding entrepreneur, starting via an acquisition is much faster than starting a new business from scratch. Through acquisition, the entrepreneur gains customers and suppliers with established market products or services.

International research shows that startups beginning via acquisition have a much higher success rate than those starting from scratch. (Source: Higher Chance of Success in Business Transfers)

Reasons to Choose an Acquisition

For established businesses, achieving economies of scale is often the main reason for mergers and acquisitions. The larger the company, the higher its value. Large companies are considered more stable and less risky, often offering more synergies.

Another motivation is cross-selling or offering complementary products and services. Such acquisitions expand the market for one's products through the acquired company's sales channels while offering the acquired company's products to one's clients.

Due to workforce scarcity, acquisitions are seen as a way to attract suitable employees. Through acquisition, you can integrate multiple employees already working in teams in one transaction. This trend was seen in the IT sector and is now present in traditional sectors like construction. The workforce is no longer seen as a ‘social liability’ but rather a key asset of the acquisition target.

Search Profile

The criteria the target company must meet is called the '[search profile](http:// https://www.overnamemarkt.be/nl/tips-en-advies/detail/8-criteria-om-een-voor-u-geschikt-over-te-nemen-bedrijf-te-vinden)'. Examples include ‘What is the desired size?’, ‘What is the desired location?’, ‘What is the number of employees?’, ‘What are the revenue, profitability, and solvency of the company to be acquired?’.

Analysis

A company is more than just numbers. A SWOT analysis can help. Evaluate the current situation on a ‘stand-alone’ basis and after integration. Consider the continuity of relationships with customers and suppliers, retaining key employees, and the future role of the current owner/shareholder.

Where to Find a Business for Sale?

1. At the Mergers & Acquisitions department of banks and large accountancy firms
2. With takeover brokers
3. On platforms like www.overnamemarkt.be

The four-leaf clover of a suitable acquisition:

1. The target company is a healthy business: clearly profitable and transparent
2. Any obstacles have been resolved beforehand (permits in order, no disputes with customers, suppliers, (ex)staff, etc., no arrears)
3. The acquisition price is reasonable: the acquisition sum can be easily repaid from the future free cash flow
4. Financing Mix: Use as many different funding sources as possible that complement each other (own resources, vendor loan, win-win loan, co-financing, guarantee scheme)