Formula for finding a buyer
No successor, no company transfer. The choice of a successor is a crucial stage of the transfer process.
Does the successor come from within the family or do you need to find the right person outside the family? Many entrepreneurs handing over their business would like to pass it on to their daughter or son. But this daughter or son still has to agree to accept the challenge.
According to the study produced in 2017 by the University of St. Gallen and Ernst & Young, "Coming home or breaking free?", most heirs of entrepreneurs had no aspirations to take over their parents’ business in Switzerland. Less than 1% of students whose parents own a business actually plan to take over the company directly after their completing their studies. This figure rises to 3.9% five years after graduation.
Transfer within the family – (also known as FBO for "Family Buy-Out") – does not always prevent the emergence of conflict and does not necessarily constitute the best variant in economic terms. In fact, the emotional component can hinder an objective analysis. In many cases, the entrepreneur transferring their business demands a lot more from their descendant than from a third party. Conversely, they will more easily ignore the lack of skills of a successor from within the family in professional terms or in terms of managing the company, with a view to providing them with a job or keeping the company in the family.
External transfer solution
With an external transfer solution, a person from management or an employee may be suitable for the takeover. This type of transfer is called MBO for "Management Buy-Out”. The advantage of an MBO lies in the fact that these people know the specific features of the company and have had the opportunity to prove their knowledge and abilities as directors.
In the case of a medium-sized or relatively large company, however, sale to an external third party always constitutes an alternative to be considered, compared to the solution within the family.
Training your successor
In the case of very small companies in particular, entrepreneurs are strongly advised to train a successor from within the company, allowing plenty of time for the process. Experience has in fact shown that this type of business is very difficult to hand over to an external third party, given that their functioning is firmly focused on the person of the owner, and given that they do not, usually, have any autonomous internal organization.
Therefore, the buyer of a very small company must quickly try to take over the entire network of the former owner, their professional know-how, accounts, calculations, etc., which, depending on the purchase price, presents a certain risk.
It is irrelevant if the potential successor is a member of the family, an employee or a third party – drawing up a profile of requirements is strongly recommended. It will help restrict the scope of the search for a competent candidate.
Various online market portals are available for an external search for a successor.
