Have you already considered the succession options for your business? Perhaps you’re like many business owners and keep putting off the topic of business succession. You’re not alone: “38 percent of senior entrepreneurs have difficulty emotionally letting go of their life’s work” (Study: DIHK Report on Business Succession 2019).
Tip 1: Plan the sale well in advance
Sooner or later, you’ll have to weigh your company’s succession options—and sooner is better. After all, the earlier you address this, the more flexibility you’ll have to structure your succession plan without time pressure and, at the same time, significantly increase the value of your company.
Instead, use the preparation time wisely to get your business ready for succession. Ideally, there should be at least five years between the decision to hand over the business and the actual transaction. This gives you time to identify and address weaknesses and valuable potential. A set timeline leading up to the final transaction will help you become aware of the step-by-step handover process and, at the same time, its complexity.
Tip 2: Explore Options for Acquiring Companies
MBO, MBI, LBO, … your company doesn’t have to be sold only to an investor. Even if your company is a family business, for example, and there is no direct successor within the family, there are a variety of options. Consider the potential advantages of selling to a strategic investor or financial investor, or whether an external individual (MBI) would be the better solution for the takeover. A management buyout (MBO) can also be an attractive option, especially if the candidates combine technical expertise with an entrepreneurial spirit.
Tip 3: Realistically Assess the Value of Your Business
“According to the Chamber of Industry and Commerce (IHK), 43 percent of senior business owners demand an inflated purchase price at the start of negotiations” (Study: DIHK Report on Business Succession 2019). On the one hand, this is understandable, since so much heart and soul goes into one’s own business. However, this love for one’s own company makes it difficult to maintain a neutral perspective. The true value drivers for a successful and lucrative succession are rooted in a wide range of factors. In addition to traditional financial metrics, soft factors such as relationships with customers and suppliers or the organizational structure also influence the company’s value.
Tip 4: Seek Expert Advice
Handing over your own business to someone else is one of the biggest—and perhaps most difficult—decisions of a lifetime. To navigate the complexity of this process, many business owners seek outside help: Experts in tax, law, and finance—as well as management consultants who can assist with the time-consuming search for potential buyers or the structuring of the handover process—can provide tremendous support. After all, an independent and competent analysis and valuation provides a sound basis for price negotiations—as well as a significant reduction in the time and emotional burden involved.
Tip 5: Plan Business Succession Reliably with MISO
One such M&A consulting firm is MISO Consulting, which—using the aumento value® system—offers you professional and value-adding support throughout the entire succession process, from the opportunity-risk analysis of your business to the final transaction. In its analyses and valuations, MISO takes into account not only financial metrics but also important soft factors to determine the optimal enterprise value for you. Drawing on many years of experience and a broad network of partners, MISO Consulting maximizes your chances of a successful handover and saves you a significant amount of time by shortening the transaction period. This allows you to plan your business succession with confidence.
