May 31, 2022 – Problems can arise when a company is handed over or taken over. According to the “Company Succession Study 2022” from the “Betrieb-zu-haben.at” platform, the most common are conflicts with family members who work in the company and/or the senior boss who remains in the company. Investment backlogs and overly optimistic planning calculations are also increasingly mentioned. It is often sold below value, and some entrepreneurs do not prepare the handover properly, according to the platform.
What are the most common problems that arise when taking over a company? Dem is the successor exchange “Betrieb-zu-haben.at” together with the Managementcenter Nord pursued.
From February to April, representatives of consulting professions involved in business succession – including tax consultants, auditors, management consultants, lawyers and experts – were surveyed across Austria.
Most frequently mentioned problem in the list: conflicts with family members employed in the company. 67.9 percent (“strongly agree”, “rather agree”) stated that this was an issue in the cases they looked after.
Also encountered by many and in second place in the ranking: conflicts with the senior boss who remained in the company.
Sometimes multiple factors in family handover
According to study director Thomas Reischauer, several factors sometimes come together when the family is handed over.
“If senior bosses continue to have a say in the company, it can lead to the undermining of young people’s authority over their employees, which is very frustrating,” says Reischauer.
Conversely, however, it could become a financial problem if the older generation who had previously been working suddenly dropped out completely, “because then they would be unable to work and additional employees would have to be hired”.
62.1 percent of the consultants involved in succession encountered an underestimated need for investment, and 59.3 percent encountered an overly optimistic planning calculation.
Company value vs. selling price
According to Betriebs-zu-haben.at, there are often “serious differences” between the company values determined by experts and the sales prices actually achieved.
“One of the reasons for this is that forecast calculations for the future play an important role in the discounted cash flow method, which buyers often doubt,” says co-study leader Harald Schützinger, who is himself a management and tax consultant.
With the “multiplier method”, on the other hand, the sales or operating results of the past few years are often used, which is easier to understand for interested parties. “Anyone who wants to sell a company should therefore start putting their business figures in order years in advance.”
Sticking points of a family-internal or -external kind
Determining the fairest possible company value also plays an important role in the handover in the family circle, adds Peter Buchegger, who founded the successor exchange together with Reischauer and Schützinger.
“If a business is handed over to a specific daughter or son and there are several siblings, the others usually have to be replaced, which of course harbors a certain potential for conflict,” says Buchegger.
In his experience, sales negotiations with external people are not always without dissonance. Frequent reasons for which potential buyers then decline are price expectations that are too high, insufficient preparations on the part of the seller or the uncovering of unforeseen risks.
Take timely action with a view to the handover
“Unfortunately, there are still entrepreneurs who stop investing years before retirement, handover or the intended sale and neglect the key figures,” says Buchegger.
“On the other hand, it would be better to act with foresight: A detailed operational analysis and the initiation of measures to improve the key figures years before they are passed on more than pay for themselves when exiting through significantly higher sales prices.”