Becoming an entrepreneur is a big step—whether you start your own business, buy a company, or open a store with a franchise license. The decision to become self-employed changes your life forever—for years to come. The same is true when taking the step in the opposite direction: Even those who, after a long period of running their own business, decide to sell their company don’t do so on a whim. A great deal of passion and dedication goes into one’s life’s work, and the prospect of soon no longer being in the driver’s seat—but instead watching a stranger call the shots in one’s own company—can evoke a queasy feeling in many people.
The successor must be the right fit
It is therefore advisable to consult a succession advisor who can guide the business owner through the process. After all, the outgoing owner’s goal is, on the one hand, to secure a good price and, on the other, to find the right buyer who will continue to run the business in line with the seller’s vision.
Empathy and Tact
Transaction consultant Roland Schwarzer says: “When I named my company after myself five years ago, we were the first to dare to use the word ‘empathy’ in our marketing. Our competitors thought it was too soft, but today many consultants advertise with it.” Empathy played a major role in his most recent project. The sellers were three engineers who were friends. They had met in night school and decided 19 years ago to start a company together in the field of building services engineering. They now employ 33 people and are all in their early 50s. The reason they wanted to sell their joint venture was not impending retirement—after all, they’re still too young for that. Rather, they simply no longer wanted to be entrepreneurs but to devote themselves to what they do best—engineering—and spend less time on management and administration. “All three wanted to continue working at their own company because they enjoy the work. They also wanted to retain a stake in the company and, at this point in time, only cash out a portion of it.” Not an easy task for Schwarzer and his team. So he’s not surprised that, in this case, it took him a few months longer than usual to finalize the partial sale. “Usually, it takes about five to nine months from the start of marketing to the notary appointment,” says the consultant. “In this case, it took us a little over a year. After all, it really had to be the right fit.”
Hardly Any Successors in the Family
The problem: Fewer and fewer business owners are finding a successor within the family. According to a KfW study, around 500,000 owners of small and medium-sized enterprises will need to plan their succession by 2022, and 100,000 of them want to have this completed by the end of next year. This is a difficult undertaking when no successor can be found within the family—which is the case for 42 percent of companies. Schwarzer explains: “Expectations regarding work-life balance have changed. When children see how hard their parents have to work, they often decide against taking over.” But there’s also the other scenario: The children are actively involved in the business and would be willing to take over—yet sometimes they aren’t even aware that their parents are planning to sell the business. “In such cases, we sense that something isn’t right within the family. Then we bring everyone to the table and look for a solution that satisfies all family members.” It’s easy to see why empathy and tact are essential in such situations. When searching for potential buyers, Schwarzer focuses on private equity firms and market participants; he also conducts research through the credit reporting agency Creditreform. “Or we find buyers through classified ads, for example on the German Business Exchange (DUB.de),” says Schwarzer. That’s also where he found the buyer for the three engineers’ company—a publicly traded Swiss firm.
Making Yourself Visible as a Prospective Buyer
Prospective buyers often struggle to find suitable properties. They should make themselves visible by placing ads on relevant portals such as DUB.de. For a potential buyer, an ad on DUB.de offers additional advantages—it can open up opportunities they hadn’t initially considered. Franchise companies also use our platform to search for licensees—that is, franchisees—or successors for an existing business. Posting an ad is well worth it: 94 percent of all advertisers receive qualified inquiries. That should provide enough momentum for the next big step.
Succession Planning via DUB.de
The German Business Exchange brings together business sellers and successors.
Germany’s largest business exchange makes buying and selling businesses convenient: purchase requests and sale listings can be posted online easily, anonymously, and securely. In addition to the business exchange, DUB.de also offers a franchise exchange where franchisors can showcase their opportunities and find franchisees for new and existing locations.
