The Strong Franc and Selling an Export-Driven Swiss SME

An export-driven Swiss SME preparing its succession carries a burden it cannot control on its own: the franc's exchange rate. This list checks, item by item, what needs to be documented before going to market so that this burden does not turn into an extra discount at the negotiating table, or into something the buyer discovers before the seller does.

1. Measure net exposure, not revenue booked in foreign currency. A company that bills 60% of its sales in euros but buys its raw materials and pays its wages in the same zone actually carries a much smaller exposure than the headline percentage in the annual report suggests. It is the gap between the two, between what comes in and what goes out in the same currency, that measures real currency risk. Imagine a watchmaking subcontractor with 70% of sales in euros but only a third of its costs booked in the same currency: its net exposure runs well ahead of what the export revenue line alone would suggest, a common pattern, not a specific client.

2. Document what the existing hedging policy covers, and what it does not. A twelve-month forward contract protects an order already signed; it protects nothing of the order book that will renew in two years at whatever the rate happens to be then. Many SMEs discover in due diligence that their hedging was built for this year's cash flow, never to reassure a buyer about margin durability over five years. A simple table, maturity by maturity, amount hedged and rate locked, answers in one page a question the buyer will ask anyway in their own format.

3. Expect the buyer to convert your valuation grid into their own currency. An EBITDA multiple applied by a European or US fund already bakes in, often without saying so explicitly, a risk premium for the franc's volatility against future cash flows. A seller who ignores this mechanic finds out about the gap at the indicative offer stage, not before: in mandates I run with a buyer based outside Switzerland, that adjustment negotiates far better when the seller shows up with their own five-year estimate of the currency effect, rather than discovering it in the offer received.

4. Separate a structurally strong franc from the current point in the cycle. A currency that has been strong for fifteen years is not a passing accident the next upswing will erase. Selling in the middle of a currency panic, just as much as waiting for a hypothetical reversal, lets the foreign-exchange market dictate a timeline that should depend first on how ready the business actually is.

5. Check the invoicing currency client by client, not just their country. A German client billed in Swiss francs adds nothing to currency exposure, even though it counts in the export statistics. This detail, often missing from internal dashboards, changes the whole picture of the risk to present to a prospective buyer.

6. Look at where production sits, not just where sales happen. An SME that exports but manufactures entirely in Switzerland, wages and rent in francs, absorbs the full margin shock of a strong currency. One that has moved part of its production into the euro zone, an assembly line in southern Germany or northern Italy, for instance, holds a natural hedge that needs to be quantified and presented as such, rather than left for the buyer to guess at in a consolidated cost table.

7. Compare your cost structure to your own sector, not a national average. An engineering workshop and a services SME that both export do not absorb a strong franc the same way: one can adjust prices over long negotiation cycles with its principal customers, the other feels the currency effect almost in real time through short contracts and quotes renewed every quarter.

8. Tailor the data room to the type of buyer in view. A financial investor or a Swiss family office thinks in francs and treats currency risk as one factor among several; a strategic buyer based in the euro zone treats it as a priority, because they will consolidate your accounts into their own currency the day after closing and will carry that risk long after the seller has left the business.

9. Revisit supplier contracts before opening the process, not during due diligence. Renegotiating a larger share of purchases into euros, when most sales already sit there, mechanically reduces net exposure without touching the price charged to customers. It is a project that takes several months, often longer than expected because of contracts already signed for a fixed term, and it pays to start it well before the first conversation with a buyer.

10. Never present a strong franc as something simply endured. A business that can show it adjusted its pricing, diversified its export markets or hedged its risk in a disciplined way tells a story of active management. One that merely absorbed the shock tells, without meaning to, the opposite story to a buyer who will look for that answer from the first conversation, well before any letter of intent.

The strong franc does not get negotiated at the closing table: it gets prepared, item by item, years before a buyer raises the question, a buyer who has usually already priced it in on their own.