Selling your SME or mid-market company: the stages of a well-run sale process

For the owner of an SME or a mid-market company, selling the business is often the most defining transaction of a professional lifetime. It involves personal wealth, the teams and the future of something built over years, sometimes decades. In the small and mid-cap segment, where buyers are numerous but unevenly relevant, an organised process makes the difference between a sale endured and a succession chosen.

Clarifying the owner’s objectives

Before valuation or buyers are discussed, everything starts with a simple question: what does the owner actually want? To sell the whole company and hand over, to sell part of it to secure personal wealth while staying on board, or to arrange a transfer to the management team?

Each answer leads to a different transaction:

• A full sale to a trade buyer or a private equity fund, with a defined transition period.
• A partial sale or OBO (Owner Buy-Out), which realises part of the value while retaining control and bringing in an investor.
• A management buy-out (MBO), in which the existing team takes over the company with financing support.

This is also the moment to set a realistic timetable. A full process usually runs over six to twelve months, depending on the complexity of the business and the number of counterparties approached.

Preparing the company and the information

Buyers pay for a trajectory, not only for a track record. The preparation phase aims to present the company at its best, without concealing anything.

• Make the accounts robust: adjust for exceptional items, isolate normalised profitability, analyse working capital and the conversion of profit into cash.
• Build a credible business plan: well-argued assumptions, consistent with the market and the order book.
• Anticipate the issues: dependence on a single client or on the owner, key contracts, litigation, the group’s legal structure, operating real estate.

An honest diagnosis at this stage avoids unpleasant surprises in due diligence, where they cost the most, in price as well as in trust.

Building the marketing materials

Two documents frame the approach to the market. The teaser presents the opportunity anonymously, in a few pages, to spark interest without revealing the company’s identity. The information memorandum then describes the business, the market, the organisation, the figures and the outlook in detail.

These materials carry the equity story: the account that connects the company’s strengths to the value a buyer will be able to draw from it. A rigorous, quantified and readable memorandum reduces the number of later questions and reinforces the credibility of the valuation being defended.

Approaching the right buyers

The choice of counterparties is one of the most important decisions in the process. The aim is not to approach as many as possible, but those for whom the company holds the most value.

Type of buyer	What they are looking for	Points to watch
Industrial group	Synergies, market share, know-how, territorial coverage	Integration of the teams, future of the brand
Private equity fund	Growth, recurring revenue, build-up potential	Owner’s reinvestment, governance, exit horizon
Individual buyer	A sound company to run	Financing capacity, transition with the seller

Direct access to decision-makers, in France and internationally, widens the field: a foreign buyer looking to establish a presence in the French market may well prove the most relevant. Each counterparty signs a confidentiality undertaking before receiving the memorandum, and information is released in stages.

Management presentations and data room

Once expressions of interest have been received, the most relevant buyers are invited to meet management. These presentations are carefully prepared: they allow the owner to embody the project and the buyers to gauge the quality of the team.

A secure data room is then opened to give access to detailed information. The adviser organises the questions, centralises the answers and keeps the process moving, so that the owner stays focused on running the business.

Negotiating and structuring the transaction

The letters of intent received are rarely comparable term for term. The analysis covers the full set of conditions:

1. The price and how it is calculated: enterprise value, net debt and working capital adjustments.
2. The payment terms: cash at closing, earn-out linked to future performance, vendor loan.
3. Any reinvestment by the owner and the terms of their stake in the new shareholder structure.
4. The warranties requested: representations and warranties, cap, duration, escrow or insurance.
5. The plan for the company: retention of the teams, the site and the brand, the seller’s transition period.

Keeping several candidates in play until an advanced stage is the strongest negotiating lever, on price as well as on terms.

Securing the financing and running the closing

An offer is only worth as much as its financing. The adviser checks the strength of the buyer’s funding structure, whether it rests on equity, bank debt or a debt fund, and draws on its network where needed to secure the transaction.

The final phase coordinates the due diligence workstreams (financial, legal, tax, employment, sometimes environmental or IT) and the drafting of the documentation: sale and purchase agreement, representations and warranties, shareholders’ agreement where there is reinvestment. Lawyers and accountants work side by side through to signing, and then to full completion.

The key point A sale is won upstream, through preparation, and secured downstream, through structuring. In between, a competitive and confidential process makes it possible to defend value and to choose, rather than submit to, the company’s future partner.

The role of the M&A adviser

In the small and mid-cap segment, owners often stand alone against buyers who do this for a living. An M&A adviser restores the balance: defining the strategy, producing the materials, approaching counterparties, running the competition, negotiating and coordinating the advisers through to closing. Partners involved at every stage, and entrepreneurs who have themselves sold or grown a company, give the owner someone who speaks their language.