The annual financial statement of a company serves as the main source of information to assess how successful this company actually is in a certain market.

The balance sheet, which is part of the annual financial statement, contains information about the funds being available to the company and where they come from. The problem is, however, that the balance sheet is related to the closing date, i.e. it "only" shows the standing of the company on the last day of an assessment period which usually encompasses the past 12 months. Hence, the balance sheet is mainly significant when comparing the current balance with those of previous periods. The profit and loss statement, on the other hand, which is another important part of the annual financial statement, provides information concerning the actual success of the company during the period under consideration by comparing revenue and expenditure.

When it comes to determining the goodwill, many companies use the annual financial statements from the previous years. These show how successful the company was in previous years. From the perspective of a potential buyer, however, the past is only of secondary importance. It is far more important to know which revenues a company may generate in the future or - simply put, how long it will take to earn back the invested purchase price.

These different perspectives are time and again causing misunderstandings during sales negotiations since quite understandably potential buyers want to pay as little as possible whereas potential sellers, on the other hand, want to obtain as much as possible. A moderator conscientiously analyzing all the figures involved in advance, objectively assessing the situation of the company and, in co-operation with the seller, establishing a sound forecast for the company, is beneficial for all parties involved in such a situation.

The VeMEMaS experts see themselves exactly in this role. They carry out an analysis of the financial statements, a so-called balance sheet analysis, for the VeMEMaS customers the results of which enable to draw conclusions about the management of the company: where do the funds invested come from and how are they used? Not least since Basle II, it is important to find out about the equity and debt financing of a company. Of course, the annual net profit as a result of the profit and loss statement is important. The real meaning of balance sheet and profit and loss statement lies, however, in linking their figures.

The expert Jens Schlüter puts it this way: "If you relate for example the balance sheet total to the turnover, you will receive the so-called capital turnover. This provides information about the dynamics of a company or how successfully a company is operating with the funds employed. This makes sense! If you can achieve more with less capital, this tells something about your efficiency. Dependent on the relevant industry, this factor should be between two and four."

The analysis of financial statements not only helps to discover the weak points but also enables to find ways to remedy these. By means of the resultant planning for the upcoming 3-6 years, a realistic value for the company can be determined serving as the basis for sales negotiations. Including the industry-specific prices paid in the previous years for similar companies - for example by using EBIT factors - provides further evidence for realistic selling prices.

"And that's exactly the point where many owners see themselves disillusioned", Schlüter has come to know. "While, on the one hand, the owner is assessing his life's work quite emotionally, the buyer is rationally appraising the company in comparison to others in the market."

Instead of leaving the owner behind disillusioned, the VeMEMaS GmbH is primarily looking towards the future in such a situation. Schlüter: "We think about how the result can be improved in future, what could be achieved in the upcoming three to ten years, and which measures and changes are necessary for this."

 On the basis of the "VeMEMaS model" (hyperlinks to the press text from October 2012), the VeMEMaS experts use their expertise and capabilities resulting from corporate development in order to position a certain company better for the future: identifying and highlighting core competencies, reducing excessive inventories or building up a second line of business could prove to be possible solutions.

"We are aiming at developing an individual long-term concept helping to increase the market value of a company durably", emphasizes Jens Schlüter. "The customer will decide subsequently if the business is continued or if the company will be sold - we make sure that the enterprise starts from the pole position."

Responsible for press information and enquiries:

Janina Krah

Telephone +49(0)7031 - 688-40-18
j.krah(at)vememas(dot)de