Ron SpickerContact
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There are more routes than family or sale. Which one fits is decided not by the market but by what the entrepreneur cares about.
Most successions do not fail on price. They fail because the process starts too late, or because everyone involved means something different by “succession”. The founder thinks of the price, the daughter of the takeover, the managing director of their job. Before an option is chosen, the parties need an honest conversation about what must be right in the end.
The in-house solution promises continuity and values that are actually lived. It works when successors have both the ability and the will, and the other heirs are fairly compensated. A company cannot be divided evenly. That is why it usually needs financing to carry the handover, and clear rules for the time after.
In a management buy-out, the existing team takes over. It knows the business and its customers but rarely has the equity, and usually needs a partner and bank financing. In a management buy-in, outside management comes in. That brings fresh know-how, but it takes time to settle and has to win the trust of team and customers.
A strategic buyer, such as a competitor or supplier, often pays the most thanks to synergies. The trade-off: the company rarely stays as independent as before. A financial investor brings capital and a growth plan and often keeps the entrepreneur on as a shareholder. It also expects a return and an exit after a few years.
The best buyer is not the highest bidder, but the one with whom the company is still recognisable in ten years.
Between keeping and selling there is a third way. A partner comes in, the entrepreneur stays invested for now and hands over responsibility step by step. It fits when the company still has growth ahead and the entrepreneur does not want to let go overnight. The partner must think long term. P4i Unternehmerkapital is built for that.
The purchase price rarely arrives in one go. It usually combines buyer equity, a bank loan, a Vendor Loan and, where applicable, an Earn-Out. Each component allocates risk differently. A Vendor Loan keeps the seller at risk for longer but widens the pool of potential buyers. Finding the right structure is a mandate in itself and part of Debt Advisory.
Who decides among the shareholders, and does everyone agree? How much time is realistically left? What role does the entrepreneur want after the handover, and for how long? How is confidentiality kept until employees and customers are told? And what do tax and structure look like, from share deal versus asset deal to pension provision? That last point belongs with tax and legal advisers early.
The most common mistake goes by one name: too late. The best moment is when the company runs well and nobody is forced to act.
This article gives an overview and does not replace individual advice. Which route fits depends on the company, the family, the goals and the market situation.
Discreet and non-binding. We run the numbers and show what is possible.