Panorama of company transfers and takeovers 2020

Panorama of company transfers and takeovers 2020

For a company manager, the ultimate objective is to ensure the future of the entity by safeguarding the know-how and preserving employment. The perpetuation of the company’s name and values and the continuity of customer relations are also very strong motivations. What is the new panorama of business transfers and takeovers in 2020?

Of all the companies, 73% of the managers wish to transmit their companies in two years, knowing that some of them are in the process of transmission.

Overview of sales and acquisitions: Age range of managers

Overall, managers are beginning to consider selling their business or planning to stop working beyond the age of 60.

Type of transmission envisaged

In nearly one out of two cases, the manager plans to transfer the company to a third party and in less than 20% of cases, to transfer it to the family.

Identification of the buyer

Approximately 51% of the managers surveyed stated that they had identified their buyer, regardless of the type of transfer.

For managers who are not considering the transfer

In 70% of cases, executives want to remain active as long as possible and 21% of them feel that it is still too early to make decisions.

“The desire to stay active as long as possible” far outweighs the fact that it is too early to make a decision at any age.  However, the need to stay active as long as possible to make up for a low retirement pension is felt most strongly by executives over 65.

Main objectives of the manager for the transmission

Regarding the state of mind of the seller, the trends are not reversed between men and women and relief is the prevailing state of mind:

– The “relief” mindset is primarily driven by “retirement” and “lots of responsibility/pressure”.

– The “enthusiasm” mindset is primarily driven by “happy to give up the business”, “the business will live on” and “grateful for these employers”.

– The “concern” state of mind is mainly caused by “the COVID period”.

Overview of sales and acquisitions: profile of successors

In 71% of the cases, the successor is under 55 years old. The majority of the successors were already involved in the acquired company: 31% of the successors already had shares in the company before the acquisition; 37% of the successors were employees of the company before the acquisition and 19% were both employees and shareholders of the company.

These elements compare with the results obtained within the framework of the mode of transmission and we note that the managers prepare their transmission better and integrate the collaborators or the partners upstream in view of the transmission.

COVID and transmission

Business leaders report that the pandemic has had no effect on their transmission plans. Except for the transfers that were already well underway. For the others, the leaders have rather frozen their plans.

Evolution of the tendency to transmit

A downward trend from last year. Only 16% of executives are considering selling their companies, compared to 21% in 2019. In 82% of cases, executives are not yet thinking of selling, compared to only 65% in 2019. And then, among the leaders surveyed, we see that the number considering a shutdown has dropped sharply compared to 2019. Most want to stay with the company as long as possible.

Overview of sales and acquisitions – Good to know:

It is important to be prepared to pass on and to assimilate the idea that power and authority will be handed over to a successor.

It is important to take the time to analyze all possible solutions and to study in depth the one that would best suit the company while respecting the desired objectives.

It is also important to set the ideal date for the transfer in advance so that all the necessary documents can be carefully prepared in time.

However, it is useless to look for a clone that is younger and as experienced as oneself because a business creation or acquisition path is unique, so one should not want to reproduce it.

Discretion is a point not to be neglected and it is essential to have potential buyers sign a confidentiality agreement. It is for this reason that it is interesting to surround yourself with professionals who will provide support throughout the process.