Update from JM Corporate Finance, The Netherlands (IAPA affiliate member)

Recent research in the Netherlands shows that most of the entrepreneurs (55%) make wrong estimations about the value of their company. 70% of these entrepreneurs overestimate the value.

There are four main reasons why de value perception of these entrepreneur differs from ‘fair value’:

  1. Wishful thinking
  2. Wrongly advised by friends and family
  3. Overconfidence
  4. Wrongly advised by their advisors

The same research shows that 70% of the entrepreneurs do not have any plans or ideas about the most effective selling process one year before the actual sale of their company.

An entrepreneur should therefore be made aware to optimize the value of his company in the years before the actual sale. A few so called ‘value drivers’ are amongst others: independence of the current owner, quality of the management team, business strategy, innovation, recurring revenue, financial/operational track record, adherence to legislation regarding labour laws, company USP’s and flexibility. During the conference in Vienna these value drivers were highlighted and discussed during the Deals & Opportunities Forum concluding that any advisor should discuss with its clients how to improve these quality aspects of the company on a timely basis before the sales process commences.

This implies various actions to be undertaken by the client which may sometimes take two or three years.

More and more clients become aware of the need for the preparation of the sale of their business. Accordingly, JM Corporate Finance has been appointed as advisor for planning and coordinating this process for at least 5 new projects during the very recent months. We would therefore recommend to place this item on the agenda for the closing meeting with your 55+ client !

If you or your client consider a (strategic) takeover or establishment in the Netherlands or you would like to discuss any Corporate Finance issues, please feel free to contact us! For further information regarding our core business we refer to our website www.jmcorporatefinance.nl/uk.

Jan van Wijngaarden                    Bart Koreman

Partner                                        Senior Advisor

jvw@jmpartners.nl                       bk@jmpartners.nl