External succession: How does it work?
There are a handful of ways for non-family-members to take over a business: Either by acquisition, which means transferring both management and ownership onto another person, or by the transfer of management only, with shares remaining for the previous owners/family. It is also common that employees that know the business well are succeeding. These are known as management buyouts.
What are the first steps for external succession?
The following questions might be helpful for those interested in external sucession:
- What industry does my business fit into?
- Where can I find a suitable business partner?
- How do I finance the acquisition of the business?
- Are there trade-specific/industry restrictions that I have to take into account? (certifications, approvals, licenses etc.)
It is important when searching for a business partner, the successor should also know the financial status and what funding programs might be suitable. In general, all funding programs for starting businesses are also applicable for business successions in Germany.
It is also crucial to set a time frame in which the business succession should take place, it is usually a few years between the first contact and the actual transfer.
Additional links and hints (in German only)
The nachfolg-o-mat (“success-o-meter”) is an online tool that gives a general overview about business succession in Germany. Each user can answer different questions and will then receive an individual analysis about their succession knowledge. In addition to that, the users can see in which areas they still need to acquire more information or knowledge and which contacts might be useful for that.
The nachfolgewiki contains many articles that explain different aspects of business succession which are important to know for external successors. The following articles might be relevant to you: