Business Succession Consulting – What Matters in Succession Consulting

The Challenge of Business Succession

Managing business succession is a significant challenge for many entrepreneurs, both economically and emotionally. It requires careful planning and professional implementation—ideally with the help of specialist advisors. It's clear: as a CEO, you should never leave your company's succession to chance.

Only a smooth transition process can ensure that:

• ... daily operations continue uninterrupted despite changes in leadership positions.
• ... you, as the owner, have ample time and all necessary information to make important decisions.
• ... you achieve the best outcome—for yourself, your employees, and the future of your company.

If you're reading this article, you're already on the right path to planning your business succession optimally. Learn about the essential factors, how to address them with a competent advisor by your side, and how to find appropriate succession consulting.

The Most Common Questions About Business Succession - Should You Consult an Advisor?

Selling your own business is not an easy decision. You've poured your heart and soul into building and growing your company, spending tens of thousands of hours in the business. It only makes sense to plan the transition carefully and rely on experienced experts for business succession.

Succession Consulting for Family Businesses

In family businesses, the family itself has a crucial influence on the operation and development of the company. Here, there is a close connection between family and organization, with two social systems with different logics overlapping and interacting.

This duality, and especially the familial nature of family businesses, provide these companies with several advantages over other business forms: they can benefit from familial intimacy, shared history, identity, and language. Commitment and responsibility for the work and the company are also supported by family engagement.

However, this structure also has a downside: the mix of economic and emotional aspects poses a risk in making critical decisions, such as succession planning. And since family businesses are also run by people, the conflict of interest between emotional family life and rational business life is unavoidable. It's questionable whether the family can balance this conflict and if so, how effectively.

Professional help is also essential here: external specialist advisors for business succession in the mid-sized sector are impartial, objective, and help you make rational decisions even in difficult situations.

The Most Common Questions About Succession Planning

As challenging as it is to decide to sell your company, succession planning can be just as difficult. Since it's a highly complex undertaking, naturally, many questions arise for the entrepreneur that cannot be easily answered generally. Some of the key questions around "business succession" and "handover" include:

• How much is my company actually worth?
• Who would be a suitable successor?
• Where can I find the right advisor who understands my business and finds the best possible successor (buyer) for me?
• Do I even need a succession advisor?

As with many business matters, you shouldn't cut corners here. If it's not clear who the next CEO of your company will be, external succession consulting is a worthwhile investment. Read on to find out why.

What Does Business Succession Mean?

To provide a foundational understanding for our further discussion in this article, let's define "business succession":

Business succession refers to the process through which the succession plan for a business is carried out. This complex process involves factors such as criteria, industry specifics, goals, and reasons.

It's essential to note that business succession is significant not only when selling a business but also when it is passed on within a family.

In this article, we primarily focus on succession consulting. If you're interested in the process of selling a business, we recommend our related article.

Business Succession Consulting – Professional Support

Business succession can occur in various ways:

• A family member becomes the successor
• An interim manager is appointed
• A professional external manager becomes the CEO
• The entire business or part of it is sold
• The business is liquidated

In all cases, entrepreneurs rely on the expertise of specialist advisors. This article aims to provide helpful guidance, so you can better understand what to look for when selecting an appropriate advisor.

Why Professional Succession Consulting Makes Sense

The decision is made: you want to sell your company. At this point, many entrepreneurs face numerous questions. This is entirely understandable. Typically, in the mid-sized sector, one only deals with selling their business once. Therefore, there are no personal experiences to draw from on how a succession process works.

Especially when it comes to your life's work, it's advisable to engage an experienced expert for succession consulting. Why? Here are the main benefits at a glance:

• An experienced and reputable succession advisor specializes in the sales process and is well-versed in all the critical factors.
• They offer an independent perspective.
• They can make the complex succession process significantly clearer.

You have two options: either hire a business broker or an M&A advisor. These experts have the necessary experience to find the right successor for your organization.

A business broker operates similarly to a real estate agent, focusing primarily on finding a suitable buyer. In contrast, an M&A advisor supports the company throughout the entire sales process, addressing all succession-related issues:

• From determining the company's value
• To preparing and organizing professional sales documents
• Selecting and approaching suitable buyers
• To handling the transaction.

As you can imagine, these are areas where mistakes can quickly happen if you are not adequately knowledgeable. To ensure the continued success of your company through a suitable successor, you should seek professional help.

If you do not plan to pass your business on but instead want to sell it, you will likely want to negotiate the best possible price. A succession expert can also assist with this.

Where Can You Find a Succession Advisor for the Mid-Sized Sector?

The internet makes it easier for entrepreneurs to find suitable business succession consulting. Or does it? Succession advisors are as numerous online as grains of sand. To help you tackle this task despite the vast offerings, we've compiled the following checklist:

• Look for recognized seals, certificates, and similar on succession websites.
• Read reviews and customer feedback.
• Ask for references.
• Pose critical questions and evaluate the answers objectively.

The good news is you don't have to search any longer: the advisors at CARL meet all these criteria and are your ideal partner for succession consulting. Our team of experts is available to answer all your questions.

What Makes a Good Specialist Advisor for Business Succession?

To find the right expert for your project, it is crucial that you clearly understand what you want to achieve with succession and what you specifically expect from your advisor.

It's worth working out your goals for the business sale internally beforehand and then exchanging ideas with potential advisory candidates well-prepared. This way, you'll be better able to gauge if the advisor understands you and can provide valuable insights for your specific situation.

Checklist: What Your Ideal Succession Advisor Should Have:

1. Experience and Expertise of the Succession Advisor:

   Ideally, your future advisor should have experience in your industry and have prepared and successfully handled multiple business sales.

   After all, you're not just selling a product but an entire business. The advisor's experience plays a significant role in this. In the best case, suitable buyers or successors are already within the network of those who have been involved in succession consulting in your industry for years. This greatly simplifies the search for successors and speeds up the process, saving you time and money.

2. Consulting Style, Reliability, Precision, and Clarity:

   It is also recommended to listen closely and critically assess the responses and ideas of your counterpart.

   Does your conversation partner address your needs? Can they offer new perspectives that you hadn't considered? An expert with many years of customer experience is often also a suitable partner in selling your business and succession planning.

3. Trust on a Personal Level in Succession Consulting:

   Additionally, it is advisable to listen closely and critically assess the responses and ideas of your counterpart.

   Here, you should trust your gut feeling. Does the chemistry fit? Throughout the sales process, you'll spend a lot of time with your future advisor – so it's worth having a good personal foundation and fundamental trust.

What Are the Tasks of a Specialist Advisor for Succession?

A qualified succession advisor helps you navigate all the challenges of a business handover. They assist with the following:

• Legal, tax, and financial aspects of business succession
• Change management while maintaining company culture
• Networking and mediation

Want to learn more? Reach out to us!

Succession Advisors – The Costs

As with all areas, the same applies to succession consulting: good quality comes at a price but is also valuable. The benefits you'll gain from professional advice during the business sale will far exceed the costs of the advisor. It's similar to hiring a tax advisor: a good expert pays for themselves in the end through the value they provide.

How Much Does Succession Consulting Cost?

The cost of consulting in your specific case primarily depends on the hourly rates of the advisory firm and the project's duration.

• Large, strategy-focused firms often have daily rates of several thousand euros.
• Smaller consultancy firms are usually more affordable.
• For freelancers, expect daily rates between 800 and 2,500 euros.

What Payment Models Are Common in Succession Consulting?

Different partners use various fee models, which can also provide clues about the quality of succession consulting:

• Success-Based Payment: Some advisors, mainly business brokers, work solely on a success basis. However, you should consider whether this is advantageous for you. While this model may seem appealing at first glance, consider this: a success-based payment could create a conflict of interest for the broker, incentivizing them to sell the business as quickly as possible. This could negatively affect the results and cost you more in the long run.

• Retainer, Hourly, or Daily Rates for Succession Advisors: More common is the arrangement of a monthly retainer or billing by hourly or daily rates to cover ongoing expenses. In this case, the success fee is lower upon successful completion.

Which model suits you best depends on your personal situation and current challenges as an entrepreneur.

Conclusion:

Good Succession Consulting – Better Results

As complex as a business sale is: with the right consulting, you bring structure to the process, increase the likelihood of success, and achieve better overall results.

The right advisor understands you and your business, has already handled many successful deals, and gives you a positive gut feeling.

We Are Your Competent Advisors for Business Succession

Are you considering selling your business and looking for a suitable successor?

Contact us – we'd love to meet you in an initial consultation and discuss possible strategies. CARL is committed to providing comprehensive advice on this significant step, always focusing on your interests.