Family transmission : how to choose a buyer ?

The family transmission offers advantages for the transferor and the transferee. Provided that the right profile is selected. Our advice to help you.

Family transmission is a complex process

Family businesses play an important economic role. In its 1 June 2017 publication on business transfers in France, BPCE reported that family transfers accounted for approximately 17% of transfers among very small, small, medium-sized and intermediate-sized businesses. This is a historical French observation, not a current Europe-wide rate. KPMG’s November 2015 European Family Business Trends report described family firms as representing 55–90% of businesses in various European countries and providing over 60 million private-sector jobs. The 55–90% range concerns the number of businesses, not the share of national employment. These historical estimates explain the importance of continuity; they do not predict the outcome of an individual family transfer.

A technically complex family transmission

In many countries, many obstacles to family transmission persist. They are first of all fiscal and the government shows a will to reduce the taxes on these transactions. But taxes are still a deterrent and make the transfer of a business to a family member very costly. Other complications also slow down the process. It is necessary to anticipate the choice between a donation and a transfer, to protect one’s own interests as well as those of one’s children, to avoid conflicts between successors and family members, to think about the most advantageous matrimonial regime and of course to train the buyer.

How to choose a buyer?

As we have seen, it is important to prepare the family transfer as well as possible. The manager must ask himself the right questions as soon as possible and discuss the different options with his family. Especially since it is difficult to totally exclude the emotional aspect of the decision. A good solution would be to ask the investor partners. They will have a more objective opinion on the different candidates.

First of all, it is necessary that the prospective buyers show their interest. This already allows to distinguish the profiles which have the will to carry the company and to make it evolve in the future. It is obviously a bad idea to “impose” to take over from your children. It is then necessary to analyze the effective capacities of the candidate. We must question his legitimacy as a manager, following his studies, his professional experience and possibly his career within the company. We can, for example, propose small concrete missions to assess his managerial and leadership skills. And of course, submit the results to the investors. Personalized coaching and training should not be excluded. They will help the future buyer to take the measure of the stakes before launching himself.
At all stages of the transaction, let the consultants of Actoria, experts in business transfers for more than 20 years, accompany you.
Source : Les Echos