Company successions
Succession planning through family succession, management buy-out, management buy-in or company sale is a crucial factor in ensuring the continuity, growth and long-term success of your business. Through a carefully crafted process, you can not only ensure the smooth transition of management, but also maximize shareholder value and create a solid foundation for the future development of the company.
Why is careful company succession important?
A carefully planned business succession ensures that your company will continue to operate successfully after your retirement. It helps to avoid potential conflicts between successors, secures jobs and preserves the legacy you have built up.
It is particularly important for companies to start planning early in order to address the legal, tax and market-specific challenges. Careful succession planning enables the development of internal talent or the identification of ideal buyers. This not only promotes employee loyalty and motivation, but also contributes to the long-term financial stability of the company. Involving all stakeholders, including those who are not directly involved in or with the company, reduces the potential for conflict and increases the chances of success.
Company succession options
Choosing the right succession strategy is crucial for the future of your company. Entrepreneurs have various options open to them when it comes to passing on their business. The choice of the best option depends on several factors, such as the structure or size of the business, personal goals and the long-term prospects of the company. Below we examine the four most common succession options: familysuccession, management buy-out (MBO), management buy-in (MBI) and thesale of the business to a strategic buyer. Each of these options has its own advantages and disadvantages, and the decision on which process to choose should be carefully considered.
Intra-family succession
A successful, family-internal company succession is based on a fair and transparent selection process. The successor must be able and willing to take over the business. Discussions should be initiated by the entrepreneur at an early stage and involve all family members, especially those who are not directly involved in the company succession.
Management buy-out (MBO)
If an internal family solution is not available, employees are the next logical option. They know the company and the owner knows them. A management buy-out (MBO) secures a great deal of know-how for the company. If employees are ignored in the succession process, this leads to frustration and unplanned departures that often threaten the company's existence.
Management buy-in (MBI)
If no one from among the existing employees feels called upon to become an entrepreneur, an external managing director and new owner can be sought as part of a sales process (management buy-in). In a careful search and selection process, know-how and management experience can be brought into the company. What applies in general is particularly important with MBI: the interpersonal chemistry must be right.
Company sale
The last, but most lucrative form is the sale of the company. This process should be managed by a professional M&A advisor based on clear instructions from the entrepreneur. He knows the potential buyers and supports the company in preparing the sales documentation and due diligence.
Frequently asked questions about company succession
Start with a thorough assessment of your personal and business goals. Then create a comprehensive succession plan that includes both contingency plans and long-term transition strategies. It is also advisable to consult a circle of professionals and advisors early on, including a lawyer, tax advisor and business consultant.
When it comes to company succession, it is important to plan early, ideally at least 2 to 5 years in advance, and to consider all relevant legal, tax and financial aspects. Careful selection of the successor, whether from within the family or externally, is crucial for the future of the company. Equally important are clear communication and an orderly handover of management to ensure continuity. It is advisable to reach agreements on the handover conditions in good time and to seek professional advice to ensure a smooth handover and avoid potential conflicts. A joint concept for the continuation of the company can help to align vision and goals.
The biggest challenges include emotional decisions, identifying and training a suitable successor and dealing with the financial and tax implications of the transition. Early and careful planning can help to overcome these challenges.
The decision between an MBO and an MBI depends on several factors, including the goals of the entrepreneur, the availability of qualified successors and the financial situation of the company. Both options offer unique advantages and should be evaluated in the context of your specific situation.