Succession readiness plan for a Fechenheim coatings business

Situation

An industrial coatings business in Frankfurt-Fechenheim, 18 staff, about €2.6 million revenue a year, coating metal parts for machine builders. The owner, 63, founded it 29 years ago. His children work elsewhere, nobody in the workshop wanted to buy, and he wanted to sell to an outside buyer within three years.

He had never sold a company and did not know what it was worth, what a buyer would ask for, or which parts of it existed only in his head. Because we buy succession cases in Rhein-Main ourselves, we know the questions from the other side of the table.

Approach

The readiness check walks through the company the way a buyer’s advisers would: accounts, contracts, customers, staff, machines, property, permits, insurance. It produced 31 findings, ranked by what each would cost at the negotiating table.

The owner-dependence review measures how much of the business leaves with the owner. About 70% of revenue came from customers whose relationship was with him alone. He alone quoted prices, signed at the bank, and held the contact for the environmental permits. A buyer prices that as risk, or asks the owner to stay three years.

The value range used the multiples method: yearly earnings times a number taken from what comparable firms have sold for. EBITDA, meaning earnings before interest, tax and depreciation, was about €365,000 a year, or 14% of revenue. At 4.0 to 5.0 times, enterprise value today is about €1.45 million to €1.8 million. We also showed the range once the dependence findings are fixed, because a buyer pays more for a business that runs without its founder.

The data room was seeded with 60 documents in the structure buyers expect, plus a list of the 24 still missing and who holds each.

The tax adviser (Steuerberater) advised on the tax side of a sale, the lawyer on the lease from the owner’s private property and the permits. Nothing we wrote is tax or legal advice, and both cover their own ground.

Result

In this scenario the owner left with a twelve-month plan of nine actions, among them: promote the senior foreman to works manager, move the six largest accounts to a second contact, write down the pricing rules, give the works manager bank signing rights, and put a market-rate lease on the workshop. We estimate the completed plan moves the achievable multiple by about half a turn, from about 4.5 to about 5.0 times, roughly €180,000 more on the same earnings. The data room and findings sit ready for the day a buyer calls, and the owner has a number to plan around.

What it cost

The engagement cost €9,500 as a fixed price, quoted before the work started. That bought the readiness check with its 31 findings, the owner-dependence review, the value range with method and comparables, the seeded data room, and the twelve-month plan. Delivery took six weeks. The work is covered by our 100% money-back guarantee: full refund on request within 14 days of delivery.

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