The topic of business succession is often associated with financing and capital flow for affected entrepreneurs. The first point of contact is often the company’s bank, which has usually accompanied the company and the entrepreneur for years or decades. Here there is an established relationship of trust with the contact person at the bank. With this quick check, you as an entrepreneur can clarify whether the bank is really up to the complex requirements of this topic?

Company succession in SMEs is currently a hotly debated topic. There is a lack of suitable successors and solutions for the upcoming and mostly inevitable handover process. Once the company succession has been resolved and ideally a Emergency case this can also have a positive influence on creditworthiness. This is because a company that cannot provide proof of a secure succession, but which will have to do so in the foreseeable future due to the age of the entrepreneur, already slips down the rankings of some banks. This often has a direct impact on the company’s credit rating and makes its financing more expensive.

Can the bank also help with business succession?

Whether the bank can provide advice and support in the search for a succession solution depends on a number of factors. We have summarised the 5 most important questions in brief here.

1. is there a “business succession” division?

Banks with their own business division that deals with this topic can usually fall back on well-founded knowledge. In addition, the advisors in this area have experience with the transfer of companies and this is part of the advisor’s everyday business. The situation is different if the corporate client advisor “also covers the topic”. Here, specialisation or the necessary in-depth knowledge of the complex process of business succession is often missing.

2. does the bank actively address the issue?

From our own experience, we know banks that only contact their customers when the current account line is insufficient, new financial products need to be sold or the bank wants to leverage synergies with its insurance partner. A good bank actively approaches the entrepreneur when a succession situation is imminent. At an early stage, the bank should actively contact the client to discuss possible solutions with him at an early stage.

3. what network can the bank offer?

Company succession is not an individual game, but must be solved as a team. The bank should have access to a solid network of succession advisors, M&A consultants and experts in the fields of tax and law. If the bank can also offer workshops or even establish contact with entrepreneurs who have already implemented a succession solution, the overall package is right.

4. are there any reference consultations of the bank?

As an entrepreneur, you only commission service providers or suppliers if the references are verifiable and plausible. Why should this be any different with your bank? Why should you do this differently for your own business succession, of all things, where a considerable, financial sum is usually at stake? The bank will, of course, remain within the bounds of banking secrecy, but will certainly be able to list some references from the advice and support it has provided to other clients.

5. what training / background knowledge does the counsellor have?

Question the knowledge of your bank advisor. Has your advisor “only” attended a seminar on business succession? Or has he already accompanied a few generation changes himself? Where does his knowledge come from? An entrepreneur’s life’s work deserves to have competent advisors at his side.