Business transfer and takeover - How to best prepare yourself

Passing on your business to a third party or within your family is a crucial stage in the life of your company, just as taking over a business marks the start of a new life for a business owner. At Spuerkeess, these two important steps are taken with the advice and support of dedicated experts. Whether you are the assigner or assignee, our experts Johny Basher and Franck Alter, both business transfer advisers at Spuerkeess, reveal the keys to a successful transfer in this article. Happy reading!

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The stages of transferring a business

Identify opportunities

The issue of transfer is particularly important for small and medium-sized companies, which are less visible to international investors but which are a fundamental pillar of the national economy. In Luxembourg, SMEs represent 75% of jobs[1]. Given that a third of business owners are expected to retire in the next few years, the subject is becoming more important. What's more, family transfers are becoming less and less the norm, with 30-35%[2] of European companies finding it difficult to hand over to the next generation.

Many factors can prompt a transfer, the most common of which are:

The assigner’s retirement
A desire to reduce workload
The business owner’s health

The assigner may also have other personal projects that they would like to pursue with the proceeds of the sale. In addition, the idea of selling the company may come from an external opportunity, or from the desire to take the company in a new direction, in line with the assignee’s individual profile.

[1] Data from the Luxembourg Chamber of Commerce (2019), The economic importance of SMEs in Luxembourg. [2] Data from European Family Business 2019

It is important to be able to detach yourself emotionally from your company in order to think about the future of the company and its employees.
Johny Basher

Ask the right questions

Thinking about the future is an important step towards a successful handover. You must be ready to hand over the reins to a new leader and be mentally prepared that you will no longer be required.

So the assigner needs to think about whether they want to sell and start preparing their company for a future transfer. They then have to decide whether they want the staff to take an equity stake, whether they want to withdraw completely or gradually, whether they want to mix a number of considerations, etc.

When a business owner decides to sell, they must assess the price at which they would be prepared to sell the company, particularly if it includes a real estate component that a buyer might not wish to take over.

You have to be transparent with the assignee, because it is the assignee who will be exposed to potential risks on several levels. You have to analyse your own situation as the assigner(s) and also as the assignee(s).
Johny Basher

At the same time, the assigner needs to consider whether the business should be passed on within the family, or taken over by employees, competitors, customers or strategic investors. They need to talk to a number of buyers to find the profile that best meets their expectations (selling price, business development potential, employee takeover, etc.). Buyers can have very different characteristics:

A strategic buyer will sometimes be able to offer a higher sale price thanks to the synergies that can be achieved.
A financial buyer can integrate the company into a broader development strategy.
An internal assignee will already be familiar with how the company’s structure works.

This is when business owners will call on specialists if they feel the need, to help them assess a range of sales prices, to support them in preparing the company for future transfer, etc.

Choose the right banking partner

Passing on the reins of your company to the next generation (whether within the family or externally) is a key stage in the life cycle of a business and requires the right support.

Spuerkeess is involved in this from the outset and throughout the process. When it comes to legal and tax issues, for example, it pays close attention to the tax regime applicable to its customers, their partners, their marital status and their family situation.

Spuerkeess’s aim is to offer a solution that enables the assignee to acquire the company involved under the best possible conditions and to support its long-term development. As such, financing is tailored to the assignee and the target company.

Since 1856, Spuerkeess has been supporting its customers throughout their development, in some cases for several generations. It has a dedicated team of specialists on hand to advise customers on the transfer, as well as on financing solutions. The team's role is to guide customers through the various stages of the operation and offer them specific products relating to the transfer. The bank offers this dual product/service package to provide the best possible guidance to sellers and buyers at this decisive turning point.

Take the time you need

In general, a handover takes between 1 and 2 years. Above all, it is important that the assigner prepares in good time to make the business transferable, and this process alone takes time. For this reason, we strongly encourage business owners to consult people they trust, people who have already taken the plunge, or the Transmission team at Spuerkeess, which is on hand to help all business owners.

We advise all assignees to take the time they need and, if necessary, to call on a range of professionals such as auditors (due diligence), tax specialists (structuring) and lawyers (drafting the sale agreements).
Franck Alter

Customers who have already placed their trust in us for their business transfer/takeover

From visionary entrepreneur to CEO of Dessange Luxembourg

Ferdinand-Marc Gallinelli's takeover of the Dessange group in Luxembourg, after devoting virtually his entire career to this internationally renowned French brand, marks the culmination of a successful career. During our interview, we wanted to find out about what motivates him and the various steps that had made him a major entrepreneur in the Luxembourg hairdressing market, as well as the details of this business takeover, which has been supported by our experts Johny Basher and Franck Alter from the Transfer team at Spuerkeess.

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