Company Succession

How to ensure a smooth hand-over of your company

Succession planning for your own company is rarely unfettered by emotions. This makes it all the more important to know what your options are – and to consciously choose the option that will give you long-term happiness. We can give you guidance here, with the following advice.

The benefits

of partnering with VR Equitypartner

Long-term trust
and reliability

It is important to know that your company is still in good hands once it has been handed over. As part of the cooperative financial network, mutual respect and a long-term outlook are part of our DNA.

Your partner from day one

With 50 years’ experience as an equity investor, we know that a hand-over needs to be carefully prepared. This is why we are available to give support and guidance right from the start of your deliberations but we can also help in the planning of unprepared company successions.

Gradual or
temporary succession

There is no standard approach to company succession. We can give you the flexibility to first sell just a minority holding, to stay at the helm despite selling or to install a successor from within the family in a few years’ time.

Succession Planning – the most important options

A successor from within the family

Finding a successor within the family, preferably a daughter or son, is still the ideal scenario for most German entrepreneurs. However, it only works out in a fraction of the cases. Very often, the next generation has other plans, is too young or does not have the necessary qualifications. At least in the last two instances, it is sometimes possible to find a solution. Ask a person you trust – preferably a friend or confidant with no aspirations to become the successor and who is not part of the family – to make their own assessment. Some weaknesses that you see as exclusion criteria can perhaps be overcome with professional coaching – or may seem less serious to an outsider. And if the successor is not quite ready, there are tried and tested interim solutions: a manager from outside the family but who knows the company well could continue to run the business and take the planned successor under their wing. It is also possible to structure equity and mezzanine financing in such a way that the departing senior family member can receive their pay out without delay and their successor can slowly take up the investment.

Management buyouts:

Management buyouts – whereby an existing manager (or team of managers) not only takes over the running of the company but also becomes a shareholder – are almost as common as solutions involving successors from within the family. The manager needs neither to be sitting on a vast fortune nor to incur excessive debt in order to be able to pay you an appropriate purchase price. In most cases, management acquires a minority stake while the majority holding is purchased by an equity investor (or financial investor or private-equity company) such as VR Equitypartner, which gives management a large degree of operational freedom. If the equity investor wants to exit after several years and the company has developed successfully during that time, the management is often able to increase its shareholding.

Management buy-In:

 

There is nobody from within your family or the company who can be your successor? This is not an uncommon scenario these days – but equity investors often have access to a comprehensive network of experienced executives with the relevant know-how. A shareholding at preferential conditions provides the management with a strong incentive to work for the long-term success of the company. In other cases, only short-term management solutions are needed, for example for the implementation of an investment project. In such instances, equity investors like to rely on interim managers, who then withdraw – perhaps making way for a successor from within the family or the company.

Owner’s buy out:

In this instance you sell your company to an equity investor – and remain a shareholder yourself by acquiring shares in the acquisition vehicle set up by the equity investor for the purpose of purchasing your company. The clear advantage for you: You can realize some of the sales proceeds immediately and diversify your assets and, at the same time, finance the purchase of company shares with the help of debt and/or mezzanine financing, therefore using less equity capital. This enables you to keep benefiting from the positive development of your company while uncoupling the operational succession from the shareholder succession.

Strategic buyer:

 

Another form of company succession: Selling to another company, usually a competitor or a company in the same sector. However, this form of succession is not always popular because the sale to a competitor can mean the loss of your company’s identity. Very often it also heralds changes to the corporate culture, and the elimination of duplicate structures can lead to job losses.

Company succession – careful planning is essential

It sounds obvious but it is underestimated time and again: A successful succession process needs careful planning. You should allow at least five years for this. Not only do you need to take aspects of corporate law into consideration but also operational issues associated with the succession. Often, the difficulty with such a long planning horizon is not to neglect the preparations in the face of urgent day-to-day business. It is also important to involve the relevant persons from early on while also ensuring your succession plans do not become public knowledge.

Most of the challenges are very obvious. They include:

  • Definition of a continued growth strategy – and a self-critical evaluation of the degree to which it is necessary and possible for you to continue having a say in matters subsequent to the handover … and at what price?
  • This also includes the question of one’s own role after the handover: Total withdrawal from all management duties? Handover with temporary dual structures? Complete withdrawal, also from the supervisory board or equivalent body?
  • The need to formulate your expectations clearly – and have an early-stage discussion about how realistic they are, not just in relation to the purchase price.
  • The set-up of an effective financial reporting system , including contractual documentation, etc.. Furthermore, all informal knowledge that would otherwise be lost when you depart, should be passed on to colleagues and documented as early on in the process as possible.

Succession often fails for the following
reasons:

  • Unrealistic price expectations. As we all know, value is in the eye of the beholder and entrepreneurs will rarely view their own work neutrally. Sometimes, entrepreneurs choose to postpone the succession of their company “until its true value is recognized” or “the market recovers”. But it would be better to seek professional advice early on, to get an independent valuation and reveal any potential weak spots. In the planning phase there is still the opportunity to eliminate these weaknesses before deal negotiations begin. That said: It is important not to delay the succession unduly.
  • Unrealistic expectations of the successor. Nobody is perfect. Your successor will be worse than you at some things … and better at others. Whether you can live with this is less important than the question of whether the weaknesses might potentially damage the company. Here, again, it is clear: Seeking an impartial opinion helps throw an objective light on matters.
  • Unable to let go – even though the succession has been arranged? Rather than retiring from day-to-day operations, the predecessor continues to come to work every day. This makes it almost impossible for the successor to fulfill their duties. Furthermore, the workforce feels divided in its loyalty, and differences in management culture and non-alignment of strategic goals can lead to chaos.

5 Praxistipps von
Finanzinvestoren

Finanzinvestoren haben sehr viel Erfahrung mit Unternehmensnachfolgen – als Teil einer Nachfolgelösung. Dabei beobachten sie immer wieder die gleichen Fehler in der Nachfolge. Fehler, die sich mit guter Vorbereitung vermeiden lassen sollten.

 

In diesem Dokument finden Sie 5 praxisrelevante Empfehlungen erfahrener Finanzinvestoren zum Thema Nachfolge. So vermeiden Sie von Anfang an typische Fehler, die eine Nachfolgelösung zu Scheitern bringen könnten.

Nachfolge-Tipps kostenlos herunterladen

Finden Sie in diesem Text Praxistipps aus der Erfahrung von Finanzinvestoren, die bereits zahlreiche Unternehmensnachfolgen erfolgreich begleitet haben. So vermeiden Sie teure und zeitintensive Fehler von Anfang an und führen Ihre persönliche Nachfolge zum Erfolg.
Welche Fehler immer wieder bei Nachfolgen begangen werden

  • Wann Sie die Vermögensfragen klären sollten
  • Welche Rolle nach der Nachfolge für Sie die richtige ist
  • Welche Vorteile ein Minderheitsverkauf hat

Case Studies

 

VR Equitypartner unterstützt mittelständische Unternehmen mit maßgeschneiderten Finanzierungslösungen. Sehen Sie Beispiele unserer aktuellen und früheren Beteiligungen.

DITTRICH + Co GmbH (DICO)

Die DITTRICH + Co GmbH aus Schwabmünchen in der Nähe von Augsburg ist ein familiengeführter Spezialist für technisch anspruchsvolle Kunststoffspritzgussteile mit knapp 100 Mitarbeitern, der

Wingert Foods GmbH

Wingert Foods GmbH

Die VR Equitypartner GmbH hat mit Mezzaninekapital den Gesellschafterwechsel im Rahmen der Nachfolge bei der Wingert Foods GmbH („Wingert Foods“) mitfinanziert. Wingert Foods ist ein

Ihre Ansprechpartner

Team Bayern

 

+49 69 710 476 – 316

Team Frankfurt

 

+49 69 710 476 – 212

Team West

+49 251 788 789-10

Your contact

For further details our contacts are available here.

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Checkliste kostenlos herunterladen

8 Faktoren, die Ihren Unternehmenswert beeinflussen

Vom Hauptbahnhof Münster/mit öffentlichen Verkehrsmitteln:

 

Mit dem Taxi benötigen Sie etwa 10 Minuten.

 

Mit öffentlichen Verkehrsmitteln gibt es vom Hauptbahnhof mehrere Buslinien. Sie nehmen entweder die Buslinie 7 Richtung Kriegerweg, die Linie 15 Richtung Albachten oder die Linie 16 Richtung Mecklenbeck. Die Ziel-Bushaltestelle heißt in jedem Fall “DZ HYP/IHK”. Von hier überqueren Sie die Weseler Straße und finden schräg gegenüber den Sentmaringer Weg. Gleich im zweiten Haus auf der linken Seite (Hausnummer 21) finden Sie die VR Equitypartner GmbH.

 

Mit dem Auto:

 

Von der A1 und A43 kommend, fahren Sie am Autobahnkreuz Münster-Süd auf der B51 und später auf der B219 (Weseler Straße) Richtung Münster-Innenstadt. Nach der zweiten großen Kreuzung biegen Sie nach knapp 400 m rechts in den Sentmaringer Weg. Die VR Equitypartner GmbH finden Sie auf der linken Seite.

Frankfurt

VR Equitypartner GmbH
Platz der Republik
60265 Frankfurt am Main

Entrance:

Cityhaus I
Platz der Republik 6
Entrance via Friedrich-Ebert-Anlage

From Frankfurt Airport:

Take the A5 towards Frankfurt to Westkreuz Frankfurt. Follow signs towards Frankfurter Westkreuz and Messe. From there, drive into Friedrich-Ebert-Anlage and follow the arrows on the map.
Parking is available in the public car park “Westend” in Savignystraße.

On request, we are happy to reserve one of our visitor parking spaces in Cityhaus I for you.

The entrance is in Erlenstraße.

With public transport:

Take S-Bahn line S8 or S9 (towards Frankfurt Hbf., Offenbach or Hanau) and you will arrive directly at the main station (Hauptbahnhof).

U-Bahn line U4 or U5 – Station Frankfurt(Main) Hbf.

It then takes around 5 minutes on foot from the station to VR Equitypartner.

Tram lines 11, 16, 17, 21 – Platz der Republik stop.

CV

  • Managing Director of VR Equitypartner GmbH
  • Responsible for Risk-/Portfoliomanagement, Value management, Accounting, Controlling, HR, Legal, Data protection, Revision, IT and Operations
  • Until merger he had been Managing Director of DZ Equity Partner since 2010
  • Before: Group Head and Vice Head of Division for Structured Financing with focus on acquisition financing (credit)
  • Apprenticeship at Dresdner Bank AG, Wiesbaden, Business administration Studies at the University of Passau and Managerial and Administrative Studies at Aston University Birmingham with “Diplom-Kaufmann” final qualification (MBA equivalent)

CV

  • Managing Director of VR Equitypartner GmbH
  • Responsible for acquisition and development of direct investments and mezzanine financing projects
  • Joined DZ Equity Partner as Investmentmanager in 2006
  • Since 2008 Member of the Executive Board and since 2013 Authorised Representative
  • Before: Procurist and Certified Accountant at PricewaterhouseCoopers
  • Final qualification: Diplom-Kaufmann (MBA equivalent), Business administration degree at the University of Mannheim