The sale is one of the most important milestones in the life cycle of a company. Many entrepreneurs, founders and CFOs are faced with the question at some point: How do I make my company "exit-ready"?
In practice, it has been shown time and time again that a well-structured sales process determines the price, speed - and whether the deal goes through at all.
However, one aspect is regularly underestimated - and it is precisely here that an often underestimated key role lies that determines success or failure: The contract management. After all, when the buyer or investors enter the due diligence phase of the exit process, one of the first issues to be addressed is: Where are the contracts? Are they complete, up-to-date, legally compliant and comprehensible?
In this article, we show why good contract management is a key factor for a successful company handover - and what you should look out for.
If a company is to be sold, it is not enough to simply point to good sales or an attractive product portfolio. Investors and buyers want substance - and above all: structure. This is exactly where the term exit readiness comes in.
Exit readiness refers to the state in which a company is optimally prepared for a change of ownership. This is not about bold measures shortly before the sale, but about strategic, in-depth preparation for due diligence - i.e. the intensive examination by potential buyers or investors.
The better a company is prepared for this test, the more likely it is that the sales process will run smoothly, quickly and at an attractive price.
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In practice, many sales processes come to a standstill - not because the business model is not convincing, but because there is a lack of transparency, clear documentation and structured processes. Potential buyers want to avoid avoidable risks.
What's more, there is no "one" exit. Companies can take different paths, for example:
The requirements vary depending on the exit strategy. But all strategies follow one principle: The basis must be right. In concrete terms, this means
In the next step, we take a closer look at the most common exit options and their respective challenges.
Anyone who has decided to sell or exit a company is faced with an important strategic question: Which exit option is best suited to their own situation and objectives?
Because not all exits are the same. The requirements, opportunities and consequences differ significantly depending on whether it is a complete sale, the participation of a financial investor or access to the capital market.
Below we provide an overview of the most common exit strategies, their respective characteristics and the challenges they pose for entrepreneurs.
The classic sale of a company to a strategic buyer from the industry - typically from the same industry, e.g. a competitor, supplier or business partner. The aim of such buyers is usually to expand their market share, add technological capabilities or strengthen internal know-how through the acquisition. Because the takeover often results in concrete advantages for the acquiring company, a trade sale can usually achieve a good purchase price - and the transaction process can be completed comparatively quickly.
Challenges:
Financial investors such as private equity or venture capital companies get involved with the aim of developing the company further and selling it on at a profit after a few years.
With a minority stake, the owners sell part of their shares, thereby securing part of their assets and retaining control of the company at the same time. In addition, they benefit from the capital contributed and the strategic support of the investor.
In a majority sale, on the other hand, control is transferred to the investor. The previous owners often retain a smaller stake and accompany the further growth - often with the aim of profiting again in a subsequent second exit.
Such an entry brings with it not only capital, but also operational experience, new networks and often a professionalization of processes and structures.
Challenges:
In an IPO, shares in the company are publicly traded on the stock exchange. It is the most demanding form of exit - but also one of the most effective if the company is positioned accordingly. An IPO provides access to considerable growth capital, increases visibility on the market and opens up access to a broad investor base.
Challenges:
In a management buyout, the existing management team takes over the company - often together with a financial investor. A buyback, on the other hand, refers to the repurchase of shares by the founders, for example after a previous investor exits the company. Both variants enable a clear transition without external control and ensure that continuity is maintained within the company.
Challenges:
Regardless of which exit strategy is chosen, it is crucial to set the right course early on, understand the individual requirements and prepare the company in a targeted manner.
Exit readiness ≠ Due diligence
Important: Exit readiness is not the review by the buyer - that is due diligence. Exit readiness is the internal preparation process with which a company puts itself in the best possible position to pass this test.
If you want to sell a company, you have to expect potential buyers or investors to take a very close look. This in-depth look has a name: Due Diligence.
Due diligence is an integral part of almost every company takeover. It is initiated by the buyer and carried out by external teams of experts. The aim is to analyze the company in all its facets: economically, legally, fiscally and organizationally.
From the seller's point of view, it is crucial to understand what is important in this test phase:
Not only figures are evaluated, but also processes, structures - and in particular: the reliability of the documentation.
Missing documents, contradictory contracts or unclear circumstances create mistrust - and can have a direct impact on the negotiation situation or the purchase price. This makes it all the more important to create the conditions at an early stage to ensure that the due diligence process runs smoothly and professionally.
This is precisely where exit readiness begins: it ensures that all relevant information and documents are correct, complete and structured - before the first buyer even comes knocking.
In the next section, we show why contract management plays a particularly central role.
Regardless of whether it is a trade sale, a sale to private equity or an IPO - contractual transparency plays a central role in all exit scenarios. It is in the interest of buyers or investors to be able to obtain a quick and reliable overview.
Professional contract management creates the necessary basis for this - and thus becomes a real success factor in the exit.
A strategic buyer - for example as part of a trade sale - is particularly interested in customer contracts, supply relationships, IP rights and existing obligations. The focus here is on questions such as:
A private equity investor attaches great importance to the scalability and resilience of the company. Decision-making processes, investment programs and the protection of key personnel must be clearly documented. It is not only the quality of individual contracts that is important, but also the ability to derive reliable evaluations and key figures from them.
The highest formal requirements apply to an initial public offering (IPO ). Contract data must be prepared in a complete, audit-proof and regulatory-compliant manner - including clear approvals, unambiguous ownership structures and traceable responsibilities. Without well thought-out, auditable contract management, an IPO is difficult to implement, which is why the following questions play a central role:
What all these variants have in common: The clearer, more structured and more comprehensible the contractual situation is, the greater the impact on the transaction process - and ultimately on the purchase price.
Well-organized, digital contract management makes it possible to provide all relevant documents in a central location, bundled and logically arranged. In addition, search functions, contract summaries and metadata enablequick orientation in terms of content. For the management taking over the company, this means that it is possible to quickly understand which contracts exist, what their content is and which deadlines or obligations are relevant.
Time is a critical factor, especially in the hot phase of a deal. Those who have already set up automatic reminders, reporting functions and role rights not only demonstrate transparency, but also diligence in corporate management. Comment functions and logging also facilitate collaboration within the team or with external partners. Questions can be clarified directly in the document and ambiguities can be clearly documented.
Also from a compliance perspective a professional system creates security: with audit trails, defined access rights and a multi-client-capable structure, it meets the requirements for audit security and data protection - for example in the context of an IPO or group-wide structures.
A company sale is not an everyday event. It places high demands on structure, clarity and traceability. Especially in the area of contracts, it quickly becomes clear whether a company is professionally managed and prepared for the exit. Those who manage their contracts in a structured manner, can provide relevant information quickly and have clearly identified risks create trust.
Contract management is not just an administrative issue. It is strategic - and crucial for exit capability.
ContractHero offers companies exactly the structure they need for successful exit preparation: A digital platform on which contracts are centrally bundled, searchable via full text, automatically evaluated and documented in an audit-proof manner. AI-supported analyses, deadline recognition, clear reporting and precise access controls turn complex contract portfolios into a reliable basis for decision-making - for management, buyers and investors.
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