The transfer of a business is a key subject for entrepreneurs: it’s a very common situation but often misunderstood. This was the theme of the workshop co-organised by the Chamber of Commerce and Business Mentoring last Tuesday.
The question is unavoidable when an entrepreneur plans to transfer their business, whether an SME or a start-up: what is its valuation? To ensure the transfer takes place in optimal conditions, it’s important to establish a realistic, objective and pertinent price. Furthermore, over and above financial aspects, other factors such as economic forecasts, market trends, the profile of the team or even the stage of development of the business can have an influence on the valuation and the final price. It’s a complex operation and many entrepreneurs tend to over-value their business.
It's an important process within the local economic fabric.
Faced with these difficulties, entrepreneurs don’t necessarily have the most suitable methods and criteria with which to value their business. Rachel Gaessler, manager of the Business Mentoring programme, explains: “The workshop is a good way to demystify and understand the valuation of business transfers. It’s an important process within the local economic fabric, and this is why Business Mentoring targets both those acquiring businesses and other young entrepreneurs.” This was precisely the theme of the workshop organized on Tuesday 31 at the offices of nyuko by the Chamber of Commerce and Business Mentoring. The objective was to present the different valuation methods which exist and the methods to use based on the characteristics of the business and the context of the operation. The elements serving as the basis for the price negotiation were also looked at using practical examples.
On this tricky subject, the organisers called upon two experts, Laurent Muller and Dan Arendt. Laurent Muller, founder and chief executive of Muller & Associés, his accounting and economic consultancy firm, is also active in the LBAN (Luxembourg Business Angels Network) and the FJD (Fédération des Jeunes Dirigeants d’Entreprises – Federation of Young Entrepreneurs). Dan Arendt is a partner of Castik Capital, a private equity fund, and also sits on the boards of directors of a number of non-profit entities and companies.
For an entrepreneur, it’s either the starting point or the end point.
In front of a packed audience, the two experts explained the different valuation methods and gave tips on identifying which to use. This was followed by numerous exchanges. Laurent Muller confirms: “For an entrepreneur, it’s either the starting point or the end point. In all cases, it should not be taken lightly. Having had personal experience with business transfers, I know it’s a long process and you need to be well prepared!”