Entrepreneur successor urgently sought

A reminder beforehand: Although the house banks require
since Basel II, an early clarification of the succession of the entrepreneur
– but notwithstanding this
most owners of medium-sized businesses are concerned about
this existential core question still far too late. You
thus bring the life’s work of generations and their
long-serving employees in dire straits. All the same:
According to a study by the Bonn Institute for SME Research
(IfM) takes up the topic of entrepreneurial succession at
owner-managed businesses have come to play a central role in the
on. But the study also brings up again the order of magnitude
and the explosive nature of the topic in a nutshell: “Each
Every year, around 30,000 entrepreneurs look for an external
successor,” says the scientific director of the
IfM, Prof. Dr. Frank Wallau. Affected by the problem
are “increasingly smaller companies. And due to
of the disproportionate share that smaller farms have in
of the total number of succession cases is expected to have
the number of annual plant closures due to a lack of
Successors, which currently stands at around 6,000, will rise.” Significantly
In addition, the number of companies that are active in the
succession are currently being sold, these are currently
21 percent of all follow-up cases. Declining, on the other hand
is the number of companies which, due to the lack of family-internal
Succession to employees from within the company
are handed over themselves (10.2 percent). And: “The existence
of companies with only a small enterprise value
or of companies affected by structural change,
in their succession requires a high level of personal commitment.
interest of the owner as well as of his possible
successor ahead,” says Munich lawyer Dr.
Johannes Fiala.

Nevertheless, more and more often a successor outside
of the family. The reasons given by entrepreneurs were
in a survey conducted by the L-Bank that no children of their own
exist (17 percent), their own children are too young (11
percent), not interested in their own children (58 percent)
or not suitable (28 percent).
Instead, the transfer of the business to externally
acquired executives are gaining in importance: in 2006
more than 1,600 companies via company exchange
“nexxt-change” to a successor.
This free of charge exchange is an initiative of the Federal Ministry
for Economics and Technology, KfW Mittelstandsbank,
of the Association of German Chambers of Industry and Commerce,
of the German Confederation of Skilled Crafts,
of the Federal Association of German Cooperative Banks and
Raiffeisen banks and the German Savings Banks and
Giro Association. Entrepreneurs looking for a successor,
as well as interested transferees can submit their profile via the
regional partners online in the exchange (www.nexxt-change.
org) or during a personal conversation.
The company, which is currently being founded, wants to break completely new ground.
located “Private Hanse University” in Rostock (www.
hanseuni.de). Peter L. Pedersen, President of the Private
University, knows the problems of medium-sized entrepreneurs
– also when it comes to the targeted search for suitable
entrepreneurial successors. “Internationally, it’s
absolutely common,” emphasizes Pedersen, “already among high school graduates.
to be on the lookout for future management trainees.
and to give the latter, in return for a commitment to
to finance their studies by working for the company.
With this goal in mind, the Hanseatic University was the first German
University organises its study programmes accordingly.
In addition to the compressed, university-based course of study
students for almost three months each semester
available to the company for a trainee career.
Anyone who has been looking for an entrepreneurial successor,
failed beside the fundamental suitability often at the
required trust. In cooperation with the Hanse University
the entrepreneur can choose up to three potential
to select suitable applicants: He finances them the
six to ten-semester course of study leading to a Bachelor’s or Master’s degree
and can use them for this purpose in every second quarter in the company.
use. Students who drop out of college,
are contractually obligated to pay the expended tuition funds
to be repaid. “Those who successfully complete the course will receive
an offer as a manager in the company or
in the event of a search for a successor, the offer of a takeover
of the company,” announces university president Pedersen.
And a final reminder: “In order to ensure the continuation
of the company, it is important to protect sick
Prune branches on the farm in good time. The duty to
Risk management at the stock corporation (KonTraG since
2002 §91 para. 2 AkGes.) also has a radiating effect.
to all other corporations, such as limited liability companies, limited,
GmbH or Limited & Co KG. The omission leads the
Entrepreneur into liability with his private assets”,
says Fiala and refers to tried and tested instruments such as legal
Controlling, risk and insurance management
– also in relation to a promised company pension scheme
for the employees. Ultimately, the exhaustion of
of structuring options through prenuptial agreements, inheritance contracts
and will – synchronized with the social contract
– to the hoped-for success for the entrepreneur.

Ralf E. Geiling

(creditreform 4/2007, 58)

From Creditreform – Das Unternehmermagazin from the Handelsblatt publishing group, issue 4/2007.

Courtesy ofwww.creditreform-magazin.de.

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About the author

Dr. Johannes Fiala Dr. Johannes Fiala

Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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