Current developments such as the Ukraine war and the associated rising energy prices have, according to a survey, led to an increased willingness to sell among medium-sized businesses.
One crisis follows another, putting pressure on many medium-sized companies. In addition to the impacts of the COVID-19 pandemic, energy prices have risen sharply due to the Ukraine war. These events are apparently leading to a change in mindset among many medium-sized businesses, showing an increased willingness to sell the company. According to Stefan Schneider, head of the office of the Federal Association of Mergers & Acquisitions, about half of the medium-sized companies are considering a sale, reports Handelsblatt.
This is the result of a survey by the Federal Association of M&A in collaboration with the universities of Bamberg and Lancaster. Other reasons that could accelerate the plans to sell include liquidity shortages and disrupted supply chains. At the same time, it is also clear that demands on potential buyers are high.
Since many medium-sized companies are still family-run, an emotional component often comes into play in such transactions, alongside all economic considerations, which must also be taken into account, according to the law firm MTR Rechtsanwälte. A common desire is for the company to continue operating and for jobs to be retained.
Moreover, additional family members are often employed in the business. This can be significant with regard to the arm’s length nature of legal transactions. It must also be clarified whether they should continue to be employed in the company in the future.
These aspects, and of course the potential consequences of current geopolitical developments, must be considered in transactions of medium-sized companies. This makes comprehensive due diligence essential to reach a fair valuation of the company.
Other important factors in determining an appropriate purchase price include existing contracts with business partners, order situation, patents, liabilities, existing employment contracts, or the type of company.
Experienced attorneys can advise on corporate transactions, mergers, and acquisitions. Especially medium-sized, family-run businesses face major challenges in M&A transactions.
