Company succession is a central component of medium-sized business policy. In the last 4 years, around 24,000 Bavarian companies have been faced with a generational change. In family businesses in particular, it is a particular challenge to determine the company successor because management and ownership lie in one hand. Companies often address this issue too late, which can lead to serious conflicts. How should a successor be decided? When is an external solution and when is an internal solution best? As a specialist lawyer for [link text=“Corporate Law Munich” id=“74″], I would like to give you important tips on this topic.
##Regulate company succession in the partnership agreement
When you start your company, you should think about succession planning. If the possible company successor and all other succession issues are regulated, there can be no disputes afterwards. When drafting the contract, it is advisable to consult a lawyer specializing in corporate law as an advisor.
##Internal or external solution?
Two solutions with different success factors come into consideration when transferring the company to a new owner/managing director.
Internal: The successor is taken over by a family member or external management if they are a shareholder in the company.
External: The ownership and rights are transferred to external companies or people, i.e. the company is sold.
In order to make the right decision when it comes to business succession, you need to think about the following points:
– Should the successor take over the entrepreneurial leadership (representation of equity) AND the operational management?
– Should these areas be separated from each other and transferred to different successors?
– How can the family be protected without endangering the company assets?
– What should the financing of company succession look like?
– Is there a precise inheritance regulation? What does this look like?
– Are other family members among the company’s shareholders? If so, what are their goals?
– Have family members already demonstrated their qualities in the company and could manage the company?
– Does the founding of the company represent the main component of the family wealth?
– What are the company’s competitive situation and earnings prospects? Is there a need for investment somewhere?
After a thorough examination of the company's current situation, a clear preliminary decision can usually be made regarding company succession.
###The company succession exchange
Such exchanges offer companies assistance in finding and choosing suitable successors. Finding a reputable business succession exchange can be extremely difficult, because after all, they are a dime a dozen. Here you should ask a lawyer for advice.
###Corporate succession – conclusion
Business succession planning is a complex process that should be set out many years in advance, ideally in the partnership agreement when setting up a business. In order to avoid conflicts, a smooth handover must be achieved as quickly as possible. If the choice is difficult, there are exchanges that can help you find a suitable company successor.
Corporate succession summarized
If you would like to receive more detailed advice about company succession in a personal conversation, I would like to invite you to visit my specialist law firm andrelang law in Munich. I look forward to being able to help you and your company.
