Is there a business succession pending for your craft business, or are you planning to take over the company yourself? Then, it is essential to start planning early. Only with timely planning can frustration and risks be avoided on both sides. Read here what is important.
Selling or taking over a craft business is a far-reaching decision often associated with many emotions – especially on the seller’s side. This makes timely planning and implementation of the takeover all the more critical. In addition to business and tax issues, there are many legal issues to consider.
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Find Your Successor: This Is How It Works
Finding a successor can become a challenge, especially in times of a shortage of skilled workers. These options are available:
Takeover Within The Family
Family succession is obvious and often desired. But this wish cannot always be fulfilled; after all, not every person is a born entrepreneur. Expectations that are too high can also put a strain on the family. Suppose someone in the family agrees to follow in the giant footsteps. In that case, various alternatives are possible for taking over, for example, by donating, selling or transferring the company in return for recurring benefits such as a pension.
Takeover Within The Company
It is also possible to take over within the craft business, i.e. an employee. Ideally, someone from a managerial position would be suitable to take over the management. The clear advantage here is that the future managing director already knows the company and all its peculiarities.
Takeover From External
If both alternatives are out of the question, the only option is to search outside the company. It is difficult due to the shortage of skilled workers, which makes it all the more important to start the search on time. The successor exchanges of the Chambers of Commerce and, for example, the exchange company exchange or the DUB portal are helpful here.
Successor Found: What’s Important Now?
An essential aspect for both sides is the purchase price of the business. But what is your own company worth? From a seller’s perspective, it is a life’s work and, therefore, challenging to price. It is advisable to have the company valued by a tax or business consultant so that, in the best-case scenario, you can successfully set a purchase price that feels good and appropriate for both parties. If you are the buyer, you must consider the risks you will take. To be able to assess your financial framework about equity and collateral, it is best to contact your bank or financial advisor early on. In addition, from the buyer’s perspective, various vital questions about the business must be clarified before signing a purchase contract. A confidentiality agreement must be concluded early since this involves sensitive data and trade secrets.
Important questions when taking over a business
To correctly assess the craft business from a business perspective as a buyer, obtaining as much detailed information as possible is advisable. Inquire very carefully about, among other things:
- current customer base
- Market or competitive situation in the region
- Information about the workforce, including age structure and qualifications
- Acquisition of assets, licenses or industrial property rights
- building law requirements at the location
- In the case of trades requiring authorization, the required qualifications are asked.
After Signing The Contract
Once an agreement has been reached and the purchase agreement has been signed, it is advantageous if both parties work together to ensure the takeover goes smoothly. Once you have handed over your business, your knowledge and experience are still in demand, especially at the beginning. It can benefit the successor if you remain available to advise for a certain period. It is also advisable to take advantage of this help as a successor. Especially in the case of an external takeover of a craft business, it is advisable to agree on a period in which we spend some time together in the (ongoing) business to prepare and carry out the takeover as well as possible.