Many entrepreneurs find that selling and finding a suitable successor is more time-consuming than expected.
In addition, there are usually no known ways of significantly reducing the high tax burden - especially for proceeds in excess of 500,000 euros.
The five biggest mistakes when selling a company:
- Poor preparation (starting too late and not developing a plan)
- Superficial and overly optimistic company valuation
- Psychological and interpersonal factors are underestimated
- No technical experts are called in to save money
- The entrepreneur has unrealistic expectations of the successor
Michael Rehberger spoke to an expert on company succession, Prof. Dr Ralph Landsittel from the law firm Rowedder Zimmermann Hass in Mannheim.
Interview with Prof Dr Ralph Landsittel
Michael Rehberger: Where do you see the greatest challenges for your clients with regard to succession planning?
Prof Dr LandsittelThe biggest challenge is deciding when and to whom a company should be transferred. This is a process that takes a long time and needs to evolve. However, this time horizon is usually underestimated - even by consultants.
The biggest problem with succession within the family is the suitability or qualifications of the people in question and whether they have the will to dedicate themselves to the company as intensively as the father, for example. Psychological factors play an important role here.
The biggest problem with non-family succession is the attitude of the banks, as they are often reluctant to finance such projects. In addition, it is crucial to analyse the weak points of the company - for example with regard to existing or missing structures. In this respect, the transferring entrepreneurs sometimes lose sight of reality, which in turn can lead to unrealistic price expectations.
Michael Rehberger: In your opinion, how long would it take to prepare a takeover process?
Prof Dr LandsittelIdeally, you should allow two years from the start of the considerations to implementation. The earlier the planning process begins, the greater the chances of a successful solution.
Michael Rehberger: In your opinion, what are the most common mistakes made in the area of company succession?
Prof Dr LandsittelThe biggest mistake is to do nothing, because then the legal succession takes effect - and experience shows that this always goes wrong.
Another mistake is to start planning too late. Since the summer of 2013, the law has made it mandatory for the transfer to take place on a specific date between living persons and not upon death. Otherwise, there is a risk of high inheritance and gift tax charges, which are often unaffordable.
Discounts of 100 or 85 per cent are only possible - if at all - with very detailed planning. However, many of those affected do not realise this.
Another frequent problem is the type of valuation: the simplified capitalised earnings value method provided for by law is now unacceptable.
Michael RehbergerWhat role does the internet play in your work as a lawyer? Is it becoming increasingly important, or do clients still value personal advice?
Prof Dr LandsittelOn the one hand, clients naturally try to help themselves with the help of the Internet. On the other hand, however, these attempts often lead to more work for us. It is not uncommon for a problem to become more complicated and for those affected to need even more help than before.
Ultimately, this often makes it more expensive than if a specialist had been consulted directly.
Michael RehbergerThank you very much for your interesting comments.
The interview illustrates how important it is to plan the sale or succession of a company at an early stage and to involve the right specialists from the outset.
After a successful company sale, however, the former owner faces a new challenge: he must invest the proceeds securely and profitably.
There is a great danger lurking here, as Michael Rehberger explains from his practical experience:
"As an entrepreneur is used to making active decisions and taking things into his own hands, it is very tempting to find a new field of activity in the management of his investments. Others have the wrong advisors and are shipwrecked as a result. Both often end up with part of the proceeds being speculated on one or two years after the sale, making the future of the entrepreneur and their family less secure.
I help to significantly reduce the tax burden through the sale. With a network of specialists that has grown over decades, I can establish valuable contacts to help you make sound decisions. For an initial exchange, you can simply make an appointment via my online calendar."
