Generational Change - what you should consider

Whether you are a potential seller or buyer, Business Esbjerg has broad experience in advising on generational change in small and medium-sized enterprises.

Are you thinking about finding a new owner who can carry your business forward? Or do you dream of taking over your workplace or buying a specific type of business?

Here we share our best advice on what you should consider in connection with a generational change.

Worth considering if you are thinking about handing over your business

We generally recommend seeking guidance and advice from the right experts as early in the process as possible. Business Esbjerg can help you get in touch with relevant advisors. The earlier you involve an advisor, the more manageable you can make the process. Likewise, an advisor can give you a sense of what your business is actually worth – so you know what you are dealing with.

Start early to prepare your business for transfer. This gives you the opportunity to create better tax conditions – and at the same time make the business more attractive to the future buyer. This can, among other things, be done by getting an overview of your rights and by "slimming down" the company's balance sheet so that the company becomes easier for a buyer to take over.

If your business has good finances and at the same time a number of buildings and/or machines, it can be difficult for a new, young buyer to approach. In such a case, you can consider moving your properties and/or machines into another company – so a potential buyer only takes over the operations but rents premises and machines from you going forward. This will make the price for taking over the business lower. In the long term, the new buyer can also gradually take over premises and machines as the finances allow.

If one of your current employees wants to take over the business, but he/she cannot afford to buy it all here and now, there is also the possibility of making a gradual takeover. For example, you can agree that the employee takes a pay cut – but in return earns a smaller ownership share in the company each month. That way, the employee will already own part of the company – and thus have to pay less out of pocket when the day of takeover comes.

Before you decide to buy (parts of) a business, you should consider what you are buying into. Whether it makes the most sense to buy an existing business or start your own from scratch depends entirely on the industry, personnel requirements, and price.

If it is a service company where you yourself are employed and among the key people, it may be better for you to start from scratch – and then spend some money on marketing your new business.

If, on the other hand, it is an established manufacturing company where there will be high start-up costs to start yourself, and you with a purchase get turnover from day one, it may be most advantageous to buy into an existing business.

Confidential guidance and sparring

Whether you are on one side or the other of the table, we at Business Esbjerg have a large network we can draw on to guide you as best as possible. Of course, we treat all inquiries confidentially and discreetly.

Contact business consultant Peter Hegelund if you have any questions.