Current developments such as the Ukraine war and the associated rising energy prices are leading, according to a survey, to increased willingness to sell among medium-sized businesses.
One crisis follows another and affects many medium-sized companies. In addition to the impacts of the Corona pandemic, the energy prices sharply increased by the Ukraine war are added. These events apparently lead to a change of thinking among many medium-sized enterprises, which show an increased willingness to sell the company. According to Stefan Schneider, head of the German Association for Mergers & Acquisitions’ office, about half of medium-sized companies are considering a sale, reports Handelsblatt.
This is the result of a survey by the German Association for M&A in collaboration with the universities of Bamberg and Lancaster. Other reasons that could accelerate the plans for a sale include liquidity bottlenecks and disrupted supply chains. At the same time, it also becomes clear that the demands on potential buyers are high.
Since many medium-sized companies are still family-run, such transactions often involve an emotional component in addition to all economic considerations, which also needs to be taken into account, according to the law firm MTR Rechtsanwälte. A common desire is that the company continues to operate and jobs are preserved.
Furthermore, additional family members are often employed in the business. This can play a role in regards to the arm’s length principle of legal transactions. Moreover, it must 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 achieve a fair valuation of the company.
Other important factors for determining an appropriate purchase price include existing contracts with business partners, order situation, patents, liabilities, existing employment contracts, or the corporate form.
Experienced lawyers can advise on business transactions, mergers, and acquisitions. In particular, medium-sized family-run companies face major challenges in M&A transactions.
