According to the European Commission (website pages dedicated to entrepreneurship), every year, around 450,000 companies and over two million employees are transferred to new owners. However, up to one third of these transfers may not be successful. Lack of appropriate planning and management are often mentioned as reasons for failures. Therefore, an adequate preparation and support by advisory services can be very helpful.
In this article, we cover often encountered key issues in situations of transfer or merger of businesses and briefly explain why and how Interim Managers can play a key role in improving that process.
The right value
For business leaders, it is often a question of a legitimate obsession: to have their company taken over at a dignified price. However, the human data and the emotional attachment to people’s life's work often prove difficult to quantify. In the best-case scenario, they may discuss with their permanent executives or managers who also see their interest in a favorable takeover. Or, in another scenario, they may encounter resistance from other employees who may fear for their position or job safety in the event of acquisitions, mergers, etc.
The temporary entry of an external expert in (financial) management will pay off here. With an objective and experienced perspective, he or she may be better able to make a market-based analysis of the company. A CEO or CFO ad interim can become the key person to help determine the substantial value, net selling value or value of future money flows.
How can they optimize the value of a business? How can they best prepare for a due diligence round? These are questions that the best Interim Managers need to answer to help pave the way for a smooth takeover or merger.
Internal or external transfer
For family companies, a transfer, merger or acquisition involving several generations is extra-sensitive. Financial or emotional aspects can play a decisive role, whether justified or not. For the founder or owner, it often comes down to not selling, let alone disavowing, the 'soul' of the company.
In the case of family acquisitions, a family charter is often drawn up, which is similar to a letter of intent for regular business transfers. In both cases, it is important that shareholders can agree to this agreement in order to preserve the serenity during and after the transition. Interim Managers may prove to be of great value during these transition periods, as their temporary role will not be affected by personal perspectives, family issues or hidden opportunities that the transition offers for them.
All experts will confirm that the strategy that accompanies the transfer of a company is paramount. It all starts with personal motivation to merge, sell or pass on your business. Listening to the wise advice of an external expert will make it possible to measure the relevance of the motivations better. Secondly, it goes without saying that an Interim Manager must be aware of the evolution of the different sectors, the regulations, the needs of the clients. Here, too, their role will be essential. Their professional "luggage" will allow you to weigh and adjust the strategy if necessary.
The timing of a transmission or merger is also paramount. Sometimes, when business leaders are so immersed in their work, they may have difficulty choosing the right moment. The serenity of an Interim Manager will be essential here to plan the right timing.
Focus on operational management
Negotiations on a takeover or merger can be so time-consuming that the business owner lacks time and energy to ensure the daily operational management of his business. Here too, it can be appropriate to delegate the daily control of the company to an Interim Manager.
Quantity versus quality
It all depends on your industry. Whether the number of potential candidates for the takeover are numerous or, on the contrary, very limited, trust your Interim Manager. With the knowledge the Interim Managers have acquired elsewhere, they are best suited to highlight your business, or even explore new avenues to find interesting buyers.
And of course, communication is key when considering a merger or transmission. Where you think things are obvious, the Interim Manager will ask you the relevant questions, think about informing the right people at the right time, and save you from unfortunate missteps.