Consulting - Mergers & Acquisitions
Corporate Succession

Types of corporate succession

Managing the succession of a business is a central challenge for many business owners of medium-sized companies, especially if there is no solution to be found within the family. We advise business owners seeking a successor to their life work on the various succesion solutions and their features. Depending on the objective, there are in principle four different forms of ownership succession to be considered.

Generally, four typical transaction partners can be considered for succession

  • companies within the sector
  • MBI (management-buy-in)
  • financial investors (private equity funds)
  • MBO (management buy-out)

 

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The specific challenges of corporate successions

The day-to-day business requires the owners full attention. However, a transaction process requires a lot of time, experience and detailed expertise in various areas.

A transaction and its specific execution involves opportunities and risks that you have to deal with intensively. The double burden on the seller and the lack of transaction experience (usually you sell your company only once in a lifetime) can make it much more difficult to seize opportunities.

Typical issues to tackle in corporate succession

 

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Your succession in professional hands

As an M&A advisor with extensive experience in corporate succession, we can provide you, the owner seeling a successor, with comprehensive support at every step of the way. The sale of a company as a result of succession planning is a complex process and involves different areas of expertise. In addition to financial and legal aspects, there are also taxation, the competition and often also social or psychological aspects to consider. The coordination of all these areas requires profound specialist knowledge and experience, which only an experienced M&A advisor can offer.

Industry expertise & international contacts

In recent years, we have gained considerable expertise, particularly in the area of language service providers. We can also support you in the healthcare sector with profound industry knowledge.
Through our membership in the GGI recommendation network, Geneva Group International AG, we have established contacts with partners abroad and are also in a position to support you in transactions outside of Germany.

Our recommendation: start dealing with the topic of succession as early as possible

If there is no successor to be found within the family, it is important to think about a succession solution in good time. By their mid-50s at the latest, business owners should address business succession, even if the retreat into private life seems to be a long way off.

It is often not possible to start the preparation for business succession in time. According to a finance study of the F.A.Z.-Institute for succession in SMEs (2005) approx. 5,000 enterprises have to be closed annually due to the lack of a succession solution. Only if a lot of things are well prepared, you can determine the right moment for your exit and act from a strong position. There is no guarantee that you will find the right successor or new owner straight away.

Therefore, enough time has to be taken to consider and implement alternatives, so that we do not find ourselves in a situation in which we can no longer act, but only react to the situation.

Generally, a transaction process takes at least 7-9 months. For succession solutions, you should plan a slightly longer timeframe and take sufficient time to determine a suitable strategy before deciding on the transaction. For example, it should be decided whether a complete or partial withdrawal from the operative business is preferred, if you would like to participate in value increases in the course of succession and considered which tax advantages and disadvantages alternative transaction types offer, etc.

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Contact us

Merten Kroehan

Director
Mergers & Acquisitions

T: +49 (30) 28 49 87-101
E: Merten.Kroehan@aios.de

Matthias Giese

Chartered Accountant
Tax Advisor
Managing Director

T: +49 (30) 28 49 87-202
E: Matthias.Giese@aios.de