Impediments in business transfers (#rentconference)
Yvonne Slots and Loek Swelsen presented at the RENT XXV conference in Bodo, Norway, a piece of research on business transfers.
Their research was conducted in the region of Parkstad, The Netherlands, at the borders with Germany (Aachen) and Belgium. This region is characterized by an important number of closed businesses, so Yvonne Slots in her introduction. The two researchers at the Hogeschool Zuid studied in particular the bottlenecks in the transfer of soon-to-be-transfered businesses, owned by aging entrepreneurs. The importance of those businesses is crucial for the region as they represent 14000 jobs.
Slots and Swelsen found out several bottlenecks :
- valuation of the company
- finding a takeover candidate
- emotional aspects
- lack of knowhow by the potential takeover candidate
- fiscal problems
- difficulties towards funding
All in all two aspects really struck me. First of all Slots and Swelsen reported difficulties towards funding as an impediment. I really have a hard time understanding this. Banks are usually approached to fund new businesses and I understand that they might be risk averse when the business doesn’t exist yet and that the future can not be sketched on the basis of facts and figures. However, in the case of a takeover, evaluation the risks is much easier as a history of reliable figures is available. In this case, funding should actually not be a problem provided the business is profitable.
The second aspect regards the takeover candidate. Swelsen reported during the presentation that aging entrepreneurs “wake up” too late as fas as take over is concerned. The take over process needs to be taken care of well in advance and not preparing the take over sufficiently in advance may explain why finding a takeover candidate is so problematic.
Last but not least the discussion following the presentation involved Lex van Teeffelen. Lex is also a specialist of take over and discovered that in 50% of failed take overs, he had found valuable assets that had been neglected.
With the baby boom generation getting retired, thousands of existing businesses will be on the market for takeover. Yet few of them will be taken over. What a pity. Thousands of jobs-seekers will remain unemployed will opportunities are available.Tags: entrepreneurship