Succession planning is an important topic for entrepreneurs and companies who want to secure their life's work for the future.
Many small and medium-sized enterprises (SMEs - up to 249 employees or turnover of up to 50 million ?) are faced with the challenge of finding a find a suitable successor and leave the company in good hands. to know. We have eight valuable tips for SMEs that should be taken into account in company succession.
You don't have much time to read? Here is an overview of the most important aspects of business succession:
- Successful company succession begins with the Timely planning
- 8 tips have been found in our years of experience as decisive highlighted
- The targeted use of company exchanges leads to the Find relevant candidates more quickly
Table of contents
- Why tips for company succession are important
- Tip 1: Start arranging company succession at an early stage
- Tip 2: Attractiveness is decisive
- Tip 3: Choose the right time
- Tip 4: Make yourself superfluous as a boss
- Tip 5: Solid company valuation
- Tip 6: Involve M&A advice and experts
- Tip 7: Dissolve pension provisions / obligations
- Tip 8: Find a suitable buyer
Why tips for company succession are important
Many entrepreneurs deal too late or not at all with the issue of their own Company succession. One of the Key strategic decisions for the preservation of one's entrepreneurial heritage is being put on the back burner by a large proportion of entrepreneurs.
And the situation is likely to get worse: Most entrepreneurs run their businesses well into retirement age. In just ten years, the proportion of entrepreneurs over 60 in Germany has doubled. And the demographic development suggests that this trend will continue.
With the right tips for company succession, successful implementation can be shaped at an early stage.
Lack of successors
Only a fraction of all family businesses are continued within the family after a generational change. According to a Regensburg Study the share of businesses passed on in the family fell by more than 30 % to about 34 %. The results of this study may reveal a particularly dramatic development, and at the same time this is the trend for family businesses that is moving inexorably forward.
High failure rate
The probability that a poorly prepared company takeover will fail is high. A study by the consulting firm Ernst & Young found that 50 % of all company acquisitions in Germany fail. The most common reasons for this are excessively high purchase prices as well as inadequate preparation for the Company sale.
Often, too little time is invested in planning and important details in the legal, economic and fiscal areas are missing. In addition, there are the emotional hurdles of all those involved.
If you want to sell your business, you should therefore definitely consult an experienced advisor. He or she can help you to find the Achieve the best possible price for your business and ensure a successful handover to the new owner. We also recommend our webinar on the topic of the safe sale of a business:
In our online seminar Selling a Business you will learn how to find the right buyer for your company.
Tip 1: Start arranging company succession at an early stage
A successful company succession is not a product of chance. In order for the handover of your company to go smoothly, you should Deal with it early and develop a plan. The sooner you start, the better you can weigh up the different options and possibilities and make a decision that is best for both you and your business. Company succession is a complex issue and the longer you wait, the more difficult it will be to sort everything out. Especially tax optimisations and value enhancements take time.
Tip 2: Attractiveness is decisive
A company takeover is perhaps similar to a wedding: you are excited and want everything to be perfect. This means you need to make your bride or groom - your company - look pretty. This means not only that you should get your books in order, but also that you should Get your business up to scratch overall need to. Make sure that all areas of your business are working well and invest in the right places. And for that you need time.
Investments may include, but are not limited to:
- The Tidying up and modernising the office space and the production sites
- The introduction of a new company logo and a new company website
- The Training of employees in customer service and support
- The Introduction of new products and services
- The implementation of management structures to ensure the subsequent transfer of know-how
- Improve key figures and increase revenues beyond old tax optimisations
Look at the company succession process in its individual phases:
- The first phase is the planning phase. In this phase, the company is prepared and a plan for the transfer of the business is drawn up.
- In the second phase, the implementation phasethe necessary legal, fiscal, organisational and financial steps are taken.
- The third phase is the handover phase. In this phase, the company is handed over to the new owner and responsibility for the company is relinquished.
- The last phase is the follow-up phase. During this phase, the new owner will manage the company and continue to develop it successfully.
Expert tip: Ideally, your company should already be made "pretty" in the first phase. This will make the subsequent phases more successful and effective.
Tip 3: Choose the right time
A successful handover depends not least on the right timing. If you want to hand over your business, you should think about the exact timing early on. Ideally Plan the handover several years in advanceso that you, your family and your company itself have enough time to adjust to the changes.
You should also check the Do not underestimate the great complexity of succession planning.. If you want to hand over without preparations, this can lead to the desired price not being achieved or even to a lack of suitable buyers.
On the other hand, if you hand over too late, you may find yourself no longer have the strength and energy, to take care of the business and there may be a typical investment backlog or market loss. It is important to find the right time for the handover so that you and your business are well prepared for the future.
Tip 4: Make yourself superfluous as a boss
An important aspect of preparing for succession is to make yourself redundant as boss. This means setting up and organising your business so that it is also works without you. Of course, it is possible that you will continue to play an important role in the company, but it is equally important that your successor is able to continue the business successfully.
This can be achieved, for example, by Share your knowledge and experience and thus prepare your successor well for taking over the company. Internal communication is also an essential point to consider so that no important information is lost in the event of your failure. Create at least a second management level and invest in modern knowledge management systems.
This is not an easy task, but it is worth investing in. If you organise your business to function without you, you will make it easier to hand it over to your successor and at the same time ensure that Your company also successful in the future will be.
Tip 5: Solid company valuation
A solid Business valuation is often the basis for decision-making and the impetus for a comprehensive succession process. However, many entrepreneurs do not know how their company is actually valued. In order to make a Realistic valuation of your company you should consult a qualified advisor. A professional advisor can help you to properly evaluate your business and develop the right strategy for business succession.
There are various methods for determining the value of a company. The most common are the Capitalised earnings multiple and discounted cash flow method. Which procedure you choose depends on various factors, such as the industry standard, the size of your company or the conscious effort required for such a procedure.
Tip 6: Involve M&A advice and experts
The involvement of a M&A consulting is a valuable tip to consider when planning your company succession. Experienced M&A advice can help you to make the find the right buyer for your company and the best possible conditions for the sale of the company. negotiate. Furthermore, counselling in the M&A process help to make all Minimise potential risks associated with the sale of your business.
However, when choosing your advisors, make sure that they have experience in your industry and with your company size. Only then can you be sure that the advisors know what is important and offer you the best possible support.
Alternative IHK, HWK
As a rule, professional M&A advice only makes sense above a certain company size. For very small companies, such as so-called 1-person businesses, other sources of advice are available. One possibility is to turn to the Chamber of Industry and Commerce (IHK) or the Chamber of Crafts (HWK) to turn to. These institutions usually offer comprehensive advisory services for smaller companies.
Tax advisers and lawyers
When consulting tax advisors and lawyers, you should take into account whether they can demonstrate generalist expertise, in addition to specialist knowledge, in the area of business succession. Only if this is the case, Benefit from an expertise of countless M&A transactions, which is essential when planning a successful company handover.
Basis of trust
You can recognise serious advisors by certain characteristics: On the one hand, they should have experience in the industry and know what is important in company succession. On the other hand, they should have a Good network, extensive references (including prestigious awards from competitions) and the right contacts have to help you find the ideal succession solution. They should also be transparent and open about the costs of M&A advice.
Tip for further reading: How can you recognise reputable business sale advisors?
Tip 7: Dissolve pension provisions / obligations
For many entrepreneurs, the question of what to do with possible pension provisions or obligations is a major concern. Most want to ensure that their employees, as well as themselves, are well provided for in retirement. However, buyers look very closely at these positions and assess the financial risk of the future. As a consequence, the early liquidation of such balance sheet positions is often recommended.
We have dedicated two separate articles to this important topic with the useful information provided by Stefan Moeller. Read here:
Tip 8: Find a suitable buyer
A successful company succession is only possible if you find the right buyer for your company. There are various ways to do this: You can just hire a broker who specialises in just brokering companies, but hardly takes on any other important services. You can place an advertisement in a trade magazine or journal. Or you can look for process specialists who are able to implement the complete M&A process for you. Irrespective of this, there is no way around online exchanges for business succession in this day and age.
Stock exchanges for succession
There are some company exchanges that focus specifically on the Specialised in the purchase and sale of small and medium-sized enterprises with a turnover of up to 50 million euros have. These include DUB, Nexxt and KERN. In all three cases, they are reputable providers with good reputations.
KERN company exchange and offers
The renowned M&A consultancy KERN has a company exchange where interested business successors can find companies that are for sale. Entrepreneurs who are looking for a successor can also present themselves on the site. KERN also offers various services for business successors, such as Seminars, webinars and coaching.
The KERN offers for succession planning are in the overview:
It is as simple as it is complex: The key to a successful business succession lies in a Good and early preparation of a company sale or a change of generations within the family. Because planning a company succession and the structured search for a successor, as well as an orderly handover process, is not a question of weeks or months, but of years.
It is important to plan the business succession early and prepare it well. With the the right tips and the support of the KERN Unternehmensbörse the company succession can be shaped successfully.