The takeover of a company by an employee, also known as a management buy-out (MBO), is a strategic approach that offers many opportunities while presenting significant challenges. This article explores the contexts conducive to this transition, the steps to follow, as well as the advantages and obstacles to overcome to ensure the success of this entrepreneurial adventure.
Why consider having an employee take over the business?
Taking over a business by an employee is an ideal solution when the transferor wants to guarantee the sustainability of his business. This scenario often arises when the manager retires. By choosing an employee as a transferee, the transferor can transfer the business to someone who already knows its inner workings, thus preserving the values of the organization and ensuring continuity for customers and employees.
Management buyouts (MBOs), where an employee or team of employees buys the company, promote a smooth transition. This approach is particularly relevant in Switzerland, where the transfer of small and medium-sized enterprises (SMEs) is crucial for the economy.
The typical profile of the employee-taker-over
The ideal employee to take over a company is often an experienced person, generally aged 30 to 50, with a good knowledge of the strategic and operational aspects of the company. Young executives are also increasingly in demand, thanks to their dynamism and their ability to take measured risks.
In Switzerland, support from transferors is common during the transfer. It can take the form of support phases, such as a seller credit or assistance in managing the transition. This help is valuable for an employee who wants not only to take over the company, but also to develop it in the long term.
The key stages of taking over a business by an employee
- Estimate the time required for transmission: Taking over a business does not happen overnight. On average, it takes 12 months to finalize a takeover, even if the employee already works within the structure. This includes crucial steps such as: company valuation, negotiations and administrative procedures.
- Surround yourself well: Surrounding yourself with professionals is essential to secure the takeover. An accountant will be able to estimate the real value of the company, while a lawyer and a notary will guarantee the compliance of legal documents. Their expertise is particularly useful to avoid financial or legal pitfalls.
- Choosing between creation and recovery: According to the Federal Statistical Office (FSO), acquired companies have a higher survival rate than new creations. While only 50% of start-ups survive after five years, this rate reaches 85% for acquired companies. This difference is explained by the presence of an established clientele and proven know-how.
The financial challenges of recovery
Financing is often a major challenge in the takeover of the company by an employee. Banks generally require a personal contribution of 20 to 60 % of the purchase price to grant a loan. This requires rigorous preparation, including the writing of a detailed business plan. This document must include financial projections over 3 to 5 years and demonstrate the skills of the buyer.
Available financing options include:
- Equity
- Bank loans
- Family or friend support
- Seller credit, offered by the transferor
- Surety bond via specialized organizations, such as Cautionnement Romand
Public entities or networks such as Business Angels can also provide suitable solutions.
Company valuation: an essential step
Before any acquisition, the employee-buyer must carry out an in-depth analysis of the company. This step includes an economic and financial audit to validate the data provided by the transferor. It is also crucial to assess the development potential of the structure, in particular the ability to increase turnover or conquer new markets.
The advantages of an employee taking over a business
Taking over a business with an employee has undeniable advantages. The buyer already knows the employees, processes and customers, which makes the transition easier. In addition, business continuity reduces the risk of failure, while reassuring stakeholders, such as suppliers and customers.
From a financial perspective, a takeover is often less risky than starting a business. It relies on an existing structure with a proven track record, allowing the buyer to focus on consolidation and innovation rather than building from scratch.
Challenges to overcome to succeed
However, the transition from employee to business owner can be challenging. The new entrepreneur must assume full responsibility for management, including paying salaries, business development and maintaining the quality of services.
An entrepreneurial mindset is therefore essential. You must be versatile, a good communicator and know how to motivate your teams. In addition, the employee-buyer must be ready to invest 120 % of his time and energy to ensure the success of his project.
In conclusion
The takeover of a company by an employee represents a unique opportunity, both for the transferor and the transferee. For the transferor, it is the guarantee of transfer your business to a person familiar with its values, processes and teams, thus ensuring reassuring continuity for customers, employees and partners. For the employee-buyer, it is a chance to transform his career by accessing an entrepreneurial status while relying on an established structure.
However, this process requires careful preparation, professional support and a strong desire to meet the challenges inherent in running a business. Financial tools, expert advice and a clear vision of future development are all essential levers for maximizing the chances of success.
Thus, with a well-planned approach and unwavering determination, the takeover of a business by an employee can become a real springboard towards a prosperous entrepreneurial future, beneficial both for the buyer, the business and the local economy.
