Brookz Takeover Barometer H2-2016: One in three business sales not planned

Over thirty percent of business sales in the Netherlands are unplanned. An unexpected offer, a conflict between shareholders and illness or death of the entrepreneur are the most common reasons.

This is one of the results of the Brookz Takeover Barometer, the periodic research of takeover platform Brookz, on figures and trends in the takeover market. The survey was conducted among 192 merger & acquisition advisory firms (approx. 800 advisers) which together represent more than 90 percent of the SME takeover market (businesses with revenues between 0.5 and 25 million euros).

On the move

It is known from various studies that a planned business sale is substantially more profitable than an unplanned sale. Despite this fact, it appears that one in three business sales is unplanned, with the business often being sold "on the spur of the moment. Most cases involve an unexpected offer (32%), but often there are also negative causes underlying the sale such as a conflict between shareholders (21%), illness or death of the entrepreneur (17%) or acute liquidity problems (11%). These cases involve a business sale that "happens" to an entrepreneur and is not anticipated with a well thought out exit plan. The reasons for a planned business sale include the desire to cash out (24%), the desire to retire (21%), the lack of a suitable successor (20% and the need for a new challenge (14%).

Not wanted

According to Floyd Plettenberg, partner at Brookz and responsible for the Takeover Barometer, an unplanned business sale is in principle always undesirable: "Negative reasons such as a shareholder conflict, illness or problems in the private situation are difficult to direct. Still, you can lay down something about this in a shareholder agreement. But even with a positive reason such as an unexpectedly attractive offer, it is better to have thought in advance about a possible business sale. We regularly see that an entrepreneur accepts such an offer too quickly. Then an exclusive negotiation process is started, while more interesting buyers may still be found.'

Outlook

Although there were approximately 5% fewer transactions in the second 6 months of 2016 than in the previous six months, the outlook for 2017 is overwhelmingly positive. A large majority of acquisition advisory firms (55%) expect the SME acquisition market to remain stable. In fact, one in three advisers expect the acquisition market to pick up further over the next 6 months. A minority of 12% expect the market to deteriorate, up from 16% 6 months ago.

Report grade

Expressed in a report grade, acquisition advisory firms give an average of 7.4 for the acquisition climate in the second half of 2016. For the expected acquisition climate in the next 6 months, respondents gave an average report grade of 7.7.