Planning an SME's company succession is challenging, as the interests of various parties come together. After agreement with the successor, you also have to take into account the concerns and interests of employees, banks and your own family in the handover process.
Our experts have put together the most important points for you so that your company succession runs smoothly.
Company succession is the process of management change in a company. The owner sells the business to a family member, employees or external third parties and hands over the corporate management reins. This can be prompted, for example, by forthcoming retirement.
Company succession is closely associated with succession planning. It helps entrepreneurs to organize the process of company succession in line with their own wishes and to determine in advance what the future of their business should look like under new management.
The subject of company succession is often emotionally charged - ultimately it’s about handing over your own life’s work, to which you have devoted a great deal of time, energy and money to build it up and maintain it. In family businesses, maintaining the tradition and the close personal relationship between the owner and successor also play a crucial role. Despite an SME remaining “in the family”, enough time should be given to planning and preparing for the family buy-out. This not only creates ideal starting conditions for the new company management, but also avoids potential disputes within the family, such as arguments over inheritance.
Entrepreneurs can also find a suitable solution outside of their own family. In around 30 per cent of cases in Switzerland, entrepreneurs sell their own company to employees, such as to the existing management (management buy-out) or workforce (employee buy-out). The advantage: As with a family buy-out, the successor is already familiar with the company’s internal features and a simplified transfer of know-how is possible.
When selling to external third parties (management buy-in or mergers & acquisitions), owners normally achieve the top selling price. Several options are available for finding the right buyer for your business: As well as looking in your own network and placing anonymized announcements on the internet, there are succession forums that bring together entrepreneurs with those interested in buying. Anyone using a specialist company for succession planning can also tap into its network for the right succession solution.
As your own personal goals take center stage from the very beginning, the following questions can help you weigh up the pros and cons of any one specific succession arrangement:
After deciding on and determining your most important goals, you can plan and implement the next steps of your company succession. This includes the strategic assessment of current position and in-depth valuation of your company. The following parameters are important in this process:
Determining criteria for the potential company succession is an important success factor for smooth succession planning. In this phase, your succession partners' network is a benefit. Potential criteria for selecting the right successor:
During the handover, a targeted approach is essential. It's only in this way that a new owner can appreciate the leadership function from the very start. Everything that is about to change due to the handover requires careful planning:
Dealing with the issue of company succession highlights the fact that: There are numerous factors to be considered when handing over a company to the next generation. It is therefore advisable for entrepreneurs to allow enough time for planning their company succession. The search for the right succession solution normally takes between one and three years,
but it's worth the effort. If you deal with the key points early enough, you simplify the handover process for all those involved, creating ideal conditions for you to step back and for your own company to continue to succeed.