Why does succession in medium-sized companies often fail?
If no one within the family or the company’s workforce is willing to take over the company — and according to a recent KFW study, this is the case in over 40% of medium-sized companies — the only option is an external buyer. If the buyer is also to be the future head of the company, then one looks for an MBI candidate, abbreviated from the English management buy-in.
True entrepreneurial personalities are rare. We speak of a potential successor when not only the management qualities, the educational background and the professional experience fit the company, but also when there is sufficient equity capital available to finance the purchase price of the company. If, in addition to experience and knowledge of the industry in question, the “entrepreneurial gene” is also present, then we speak of a “match” when it comes to staff changes. Finding this suitable candidate is difficult — ¾ of all company sellers see this as the biggest hurdle and not in finding the purchase price! On the one hand, there are fewer and fewer candidates willing to take on the risks and hardships of self-employment, and on the other hand, you have to get to know the right prospective buyer somehow, and without jeopardizing the confidentiality offered in the sales process.
The founder of Stabwechsel, Ralf Baumeister, was also faced with precisely this question around 12 years ago. There were exchanges, lists and publications of companies for sale but few sources of “vetted” and thus serious MBI candidates. Stabwechsel has set itself the task of closing precisely this gap. With currently over 700 hand-picked candidates in our database, you can find a good number of suitable and interested buyer candidates for almost any sale offer here. Since the entrepreneur usually does not want to announce that he wants to sell, he relies on an anonymous search and equally wants the highest possible transparency in the process of getting to know each other. The same is often true for prospective buyers, especially if they still hold a management position as an employee in a company. Staff Change does just that.
Succession remains a people business, but digital search processes can provide valuable support. As a matching platform, a central part of the baton change system takes place online — i.e. digitally. However, we question whether the entire process in the follow-up business can be digitized. A digital process, even with the use of true AI, cannot act and function as effectively, creatively, and attentively as an experienced M&A advisor, or only to a limited extent. Ultimately, an algorithm or AI (e.g. ChatGPT) can only work with what is specified as a profile on one side and defined as a request on the other. If an aspect is unclear, inaccurate or not specified at all, the result can only be sub-optimal. Moreover, it will take a long time, if ever, for sellers and MBI candidates to have enough confidence in a purely digital system to conduct their confidential and often once-in-a-lifetime search for a successor or their own future company online.
That’s why every MBI at Stabwechsel is coached by an experienced M&A advisor, an accredited Stabwechsel coach. So every contact request resulting from a match is sensitively moderated by a professional. Thus, usually two M&A professionals first talk to each other as representatives of the sell side and buy side and clarify further details and interests without removing the anonymity of the actual players. This is a very effective approach, which then leads to concrete and individual negotiations as soon as a sufficiently good basis for discussion has been identified.
About Gerald Link
Gerald Link is the managing director of Stabwechsel GmbH. Together with the founder and managing director Ralf Baumeister, he continues to develop and optimize the service for the M&A process. He has been self-employed since the early 1990s and has been involved in a large number of company start-ups, takeovers and company expansions, both as managing director and as consultant and shareholder. His competencies lie in particular in the areas of communication and strategic development. Gerald has been interested in digital communication and digital business processes since the birth of the Internet and has accompanied many companies on their way to digitalization and in the implementation of e‑commerce projects. — email@example.com