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We help clients with the application and use of foreign financial aid of EU and other funds and help prepare financial reports.
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We perform payroll accounting for companies whether they employ a few or hundreds of employees.
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Grant Thornton Baltic's experienced tax specialists support accountants and offer reasonable and practical solutions.
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Our experienced accountants and advisors help you prepare consolidation tables and make the consolidation process more efficient.
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Our experienced specialists advise on more complex accounting transactions, rectify poor historic accounting, and offer the temporary replacement of an accountant.
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Our specialists advise payment institutions, virtual currency service providers and financial institutions.
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The service is intended for entrepreneurs who are looking for a reliable partner to solve the company's day-to-day legal issues.
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Whistleblower channel
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Business model or strategy renewal
In order to be successful, every company, regardless of the size of the organization, must have a clear strategy, ie know where the whole team is heading.
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We support you in updating your marketing and brand strategy and customer management system, so that you can adapt in this time of rapid changes.
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A good organizational culture is like a trump card for a company. We guide you how to collect trump cards!
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A good business plan is a guide and management tool for an entrepreneur, a source of information for financial institutions and potential investors to make financial decisions.
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We estimate the company's market value, asset value and other asset groups based on internationally accepted methodology.
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The lack of planning and control of cash resources is the reason often given for the failure of many businesses. We help you prepare proper forecasts to reduce business risks.
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An employee of an Estonian company abroad and an employee of a foreign company in Estonia - we advise on tax rules.
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Our tax specialists have prepared a comparison of the tax systems of the Baltic countries regarding the taxation of companies and individuals.
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We help fill positions in your company with competent and dedicated employees who help realize the company's strategic goals.
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We map the HR management processes and provide an overview of how to assess the health of the organization from the HR management perspective.
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We provide internal audit services to financial sector companies. We can support the creation of an internal audit function already when applying for a sectoral activity license.
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We conduct audits of projects that have received European Union funds, state aid, foreign aid, or other grants.
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We help to prepare a money laundering risk assessment and efficient anti-money laundering procedures, conduct internal audits and training.
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Risk assessment and risk management
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Custom tasks
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Whistleblowing and reporting misconduct
We can help build the whistleblowing system, from implementation, internal repairs and staff training to the creation of a reporting channel and case management.
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We help solve issues related to the environment, social capital, employees, business model and good management practices.
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Our auditors review and certify sustainability reports in accordance with international standards.
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We help investors to analyze the environmental issues, social responsibility and good management practices of the company of interest.
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Our international tax specialists define the concept of sustainable tax behavior and provide services related to sustainable tax behavior.
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Digital strategy
We help assess the digital maturity of your organization, create a strategy that matches your needs and capabilities, and develop key metrics.
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We aid you in determining your business’ needs and opportunities, as well as model the business processes to provide the best user experience and efficiency.
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Our team of experienced business analysts will help you get a grip on your data by mapping and structuring all the data available.
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Cybersecurity
A proactive cyber strategy delivers you peace of mind, allowing you to focus on realising your company’s growth potential.
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Innovation as a Service
On average, one in four projects fails and one in two needs changes. We help manage the innovation of your company's digital solutions!
Author: Karin Küttis
Disposal of a company, whether it's a private or public limited company, is not the same as selling a car on auto24.ee. The process of selling a company is much more complex and time-consuming.
Exiting a business can mean the biggest step in one's life, both financially and emotionally, since sweat, effort and tears have been poured into building the business over the years. It's a decision that takes careful thought. Potential buyers will always be curious as to why the owner is selling off his life's work. There can be a variety of reasons for selling, but broadly they fall into two categories: personal and business.
Personal factors are generally:
- Retirement and/or lack of successors.
- Illness or death of the owner.
- Weariness, boredom and reduced interest in the field.
- New challenges that require both financial and emotional attention.
Business reasons can be the following:
- Problems with partners. Differing visions of the company's future or some other disagreement can precipitate a sale of a company to a third party or a partner.
- The company operates in an industry that has reached maturity, and the owner expects growth to slow down in the near future.
- The company has great growth potential, but for expansion, the company needs additional capital – a new owner can increase capital and accelerate growth.
- The owners need more liquidity.
- The company is not profitable enough for its size. The last reason may not be very appealing to the acquirer, but a company's attractiveness can be highlighted by communicating the strengths of the business and possible synergies that may arise from a merger or acquisition. A company is more attractive if it has a solid and well-established loyal customer base, multi-year contracts, and synergy is created in the merger or acquisition of the company, which leads to the desired profit margin. It is also important to have a strong management team that is growth-oriented and continues to operate even after the closure of the sale.
Before disposal of the company, consider the decision thoroughly
You can handle the sale of the company yourself or use the help of specialists. At first glance, it might seem like there’s financial argument to doing it yourself, since it costs something to go through consultants. Also, selling a company can seem easier than it actually is. In fact, errors can be made when going the DIY route. One of the biggest mistakes is to misjudge the value of the company. It can be valued too high or too low. By overestimating the value of the company, the sale of the company may take a long time or fail.
Steps to selling a company:
- Preparing for sale: identifying value-reducing factors, getting accounting records in order, analysing optimal taxation, reviewing contracts and pre-sale restructuring.
- Developing a strategy and finding interested parties: valuation of the company, determining the transaction price, mapping and finding potential buyers.
- Participating in negotiations: finding the best solution by justifying and explaining different positions.
- Conducting due diligence: financial, tax and legal due diligence.
- Drafting and negotiation of purchase and sale agreement, preparation of documentation.
- Conclusion of the transaction: signing of the contract and follow-up activities.
- Post-transaction activities.
A financial advisor can be of assistance in all of the previously described stages.
Preparation for sale
Before a business is sold, the company must be prepared for sale. This process has to be started early, and the earlier, the greater the possibilities to increase the value of the company. The preparation time depends on the size of the company, how many factors reduce the value, how orderly the accounting is, the nature of the existing contracts, etc. It may take several years for a business to become attractive. The preparation period helps to make accounting transparent, improve financial indicators, increase the number of customers, pay off tax debts, and terminate deleterious contracts. If the period of preparation for sale is too short, negative indicators may be concealed or expenses not recorded correctly. In general, the potential acquirer does research on various channels, and any concealed or incorrectly reported information will become apparent. This destroys trust. However, if enough time has been set aside for the sale, it is possible to choose when to sell the company. Choose a time when the company's sales results are consistently good, as this will allow the owners to point up the company's value. In addition to profitability, the company's vitality and growth potential are also important for investors.
Developing a strategy and finding interested parties
When developing a strategy, the first thing is to determine the value of the company and set the price of the transaction. The most important thing is not to value the company too low or high. The former usually happens when the sale is rushed. An unrealistically high value is a dead end, because potential buyers lose interest. The sales price of a company can be determined in different ways, either based on assets or revenue or by some other method. The selection of method and factors to be considered is a decision that requires careful thought. Experts of the field are well poised to determine the fair value of the company. A third-party valuation service will make the company's price seem more trustworthy for the buyer.
Finding prospective buyers can take time, even years. To increase the number of interested parties, the sale of the company should be advertised to as many people as possible. If the company has a good reputation/is well-known, or if the buyer is local, advertising the sale is not so important. In the case of the former, the company or company brand is its own best advertisement. In the latter case, the buyer already exists.
But often a larger number of interested parties are needed. One way of increasing the number of prospective buyers is to use a transaction advisory service. This includes mapping and contacting potential buyers. The Grant Thornton Baltic transaction advisory team has an international network that can further increase the number of interested parties.
The big challenge is to find the right buyer. Once several potential buyers have been found, the most likely of them should be selected and negotiations continued. Potential acquirers are introduced to the company and the team in more detail. Everything that needed to be overhauled in the preparation phase was hopefully done, so that the buyer can now be left the best possible impression.
Negotiations
Negotiation skills are very necessary in disposal of a company. Potential buyers want to drive the price down. To not succumb to this pressure, it's a good idea to enlist the help of a transaction advisor who has previous experience in negotiations. A third party is not as emotionally invested in the transaction, and by citing objective evidence and explaining different points of view, the best solution can be found.
Due diligence
When selling a company, one of the most critical tasks is to conduct due diligence. In the course of due diligence, the buyer obtains information about how the business has functioned so far. In due diligence, various contracts (with employees, suppliers, customers) are reviewed and financial statements are analysed. Due diligence is mostly carried out in the financial, tax and legal fields. During due diligence, the buyer focuses on potential faults in the business to be purchased in order to gain an overview of whether the information provided by the seller so far is true and that there are no hidden obligations. Due diligence performed by a third party gives the buyer confidence and points out the risks that must be taken into account both when drawing up the sale agreement and after the transaction. Due diligence is also important for the seller. In the process, important details or assets that add value to the business may emerge. At the same time, newly revealed details give owners the opportunity to correct contracts or reports before the sale.
Drafting and negotiation of the sale contract
Drawing up a purchase and sale agreement involves documentation and legal terminology. Transaction advisors can assist in negotiating the contract and assist with transaction documentation, such as a non-disclosure agreement (NDA), company sale and purchase agreement (SPA) and other necessary documents.
Conclusion of the transaction
Closing a deal is more than just affixing a signature. Follow-up activities are also mapped. Transaction advisors, for example, help companies with a larger market share prepare and submit merger notifications to the Competition Authority in order to obtain merger approval.
Post-transaction activities
The structure of the transaction and the outcome of due diligence determine the post-transaction activities. Transaction consulting also consists of mitigating risks identified in the due diligence audit, terminating contracts or negotiating changes, integration of companies, etc. Often, during the sale, the buyer is given assurances and guarantees to which the buyer and the seller remain bound for a period of time.
If you have similar challenges and questions, please contact our specialists.