How does the price determination work when selling a company in the IT industry?
Selling a company in the IT industry? Which companies are sold in the IT industry? Where can you find a company to take over? Which company exchanges are specialized in buying and selling companies in the IT sector? How does employee integration work in the context of a takeover?
Here you will find an overview of company acquisitions in the IT industry:
- Day-to-day business of an IT company
- Pricing for the sale
- How can a sale be successful?
- Summary and Outlook
The day-to-day business of an IT company is the sale and consultation of software and hardware components. Selling the company is new territory and therefore the right advice is crucial to determine the purchase price. Management consultancies that specialize in this area help to determine the price.
Price determination for sales – explained step by step
First of all, it is important to look at your company from the perspective of the buyer. How has the company developed over the past few years. Are there well-maintained supplier and customer relationships? What are the economic indicators. In practice, IT companies can usually be assigned to medium-sized companies. Employee numbers between twenty and forty are the rule here.
A potential buyer of an IT company is interested in the business model and the organizational maturity in addition to the specialists and customers. The perspective depends crucially on the nature and strategic orientation of the buyer.
This is how price determination works when selling a company ..
When it comes to the purchase price, the views of the buyer and seller are often far apart. The different perspectives can be presented in an initial conversation. With the help of a data room, further sensitive data can then be exchanged. A company expose helps to work on a common thread through the information. A common calculation parameter is a company’s EBIT.
Since every sales process revolves around the company value and, derived from it, the purchase price, here you will mainly find business consultants and inevitably many people from outside the industry such as tax consultants, auditors and bankers. The tax perspective in particular is an important building block for goodwill.
Assuming that we are currently – at least with IT system houses – in a buyer’s market and not in a seller’s market, it either takes time and a high level of personal commitment on the part of the seller. Or the support of an M&A consultant who specializes in the IT industry with broad market access in connection with an optimal process to actually bring the project to a close.
Use the tips and tricks when buying a company ..
How can a sale be successful?
- Success depends on the relationship between the people involved
- The business model of the company to be bought must appear interesting to the buyer
- The buyer must recognize a strategic and financial advantage
- At best, operative units can merge after purchase
Summary and Outlook
Another important factor influencing the purchase price is the motivation of the selling IT entrepreneur. Why does he want to sell at all or is he looking for a strategic investor for a stake? And when? A very superficial insight into this matter can also be found, for example, in the media: “The Lions’ Den“. Every seller needs a clear and convincing answer to these questions, because they are guaranteed to be asked by the buyer or investor in the process.