Five-step succession process
Start tackling the issue of succession management well in advance.
Our network of experts can help give you a clear overview of your current situation as well as potential obstacles in succession planning. This process can be broken down into five main stages:
Whether converting the company to another legal form – e.g. a joint-stock company – or if you are addressing issues like assessment planning or pension, marriage, inheritance law, and advance directives: we can assess your current situation with you and explore your own ideas and goals.
We use this situation analysis to establish initial prep work that our specialists will be happy to help you execute.
We assess and prioritize the different internal and external options you have. This includes the following:
- Compiling the advantages and disadvantages of possible succession options.
- Visualizing the requirements for implementing each option.
- Searching for potential buyers.
- Drawing on experience from other succession solutions.
Together we prepare the company, the outgoing entrepreneur, and the incoming entrepreneur for the handover. During this step we assist you in the following:
- Structuring your private wealth and the company's assets.
- Executing the financial plan based on marital property law, inheritance law, and private financial planning.
- Supporting successors in drawing up a business plan and liquidity planning.
In the final step of the successor assuming management and ownership, we are there to offer you support in the following:
- Conducting asset transactions.
- Obtaining succession financing.
- Managing disposable portions of assets (asset allocation).
- Providing the company with ongoing assistance after handover.
Eight success factors for company succession
There are a number of risks involved in the succession process that may be insignificant in one case, while in another, they could spell an undesirable end to your plans. The following eight factors are crucial to success.
1. Succession management
Approach your succession planning as a project: Define the participants, goals, roles, guidelines, and a timeline.
2. Clarify needs
At an early stage, clarify the demands of groups with different expectations and the power they wield.
3. Capital structure analysis
Take steps to ensure that your company can cope with a succession: Analyze its capital structure and define organizational rules in writing.
4. Bring external partners on board
Carefully analyze your requirements for advice and only when you have done this, select partners who can fully meet your needs.
5. Compare succession options
Always review several different succession options and consider the benefits and drawbacks of each one.
6. Consider legal issues
Consider all the legal aspects such as the requirements stipulated by inheritance law.
7. Create financial transparency
Ensure financial transparency so that you and the successors have an objective basis for making decisions during the preparation and handover stage.
8. Plan your own future
Take early action to plan your own future outside of the company.
Our guidelines on succession financing
A suitable successor cannot always be found in-house. Potential buyers are confronted with the issue of succession financing. Company structures and succession processes vary widely, so we consider each case on an individual basis. That said, however, there are some general guidelines which can be deviated from in justified cases.
- It should be possible to repay the portion financed by borrowing within five years. This should not exceed three times the annual profit (before interest, tax, and depreciation).
- The equity capital should be equivalent to about half of the purchase price. The vendor's subordinated loans are set off against equity capital for this purpose.
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Personal consultation
Do you have questions about or would you like a consultation regarding succession at your company? We have the right solution. Schedule a personal consultation with our experts.