As the successor/buyer, you can envisage three big scenarios:

  1. Given that you have an entrepreneurial spirit, you may want to take over an SME.
  2. You may be interested in taking over the family business.
  3. If you are an employee or a manager at a business, you may be interested in buying that business.

No matter which scenario applies to you, taking over the reins of a business means becoming involved in a succession process whose goal is to secure the future of the business and ensure your success in your new roles. It also a good time to take stock of your knowledge, your competencies, your skills, your social network, and your finances. Doing so will guide you in your choices.

Two Big Challenges for Successors

Acquiring the appropriate knowledge and competencies for your next role will help you manage your new business and develop the necessary legitimacy to mobilize your employees and your business partners. This can involve the following:

  1. Training and relevant experience: This experience should be connected to the activities of the business, to its industry, or to entrepreneurship and business management.
  2. A transfer of the incumbent’s knowledge and social network: This type of transfer between the incumbent and the successor requires a good relationship and close cooperation between the parties. For example, if there is a period of joint control or a period of transition during which the incumbent acts as a consultant after the sale of the business, he or she will be able to transfer essential knowledge and expertise related to the business and industry as well as his or her social network. It will be an opportunity for the successor/buyer to benefit from knowledge and expertise that the incumbent has developed over many years.

The other challenge for the successor/buyer is to align his or her expectations with those of the incumbent. The incumbent and the successor can have different expectations with respect to the terms and conditions of the transfer, the strategic vision for the business, and the means of making this vision a reality. There are two possible ways to achieve this alignment of expectations:

  1. In the case of a transfer within the family or an employee buy-out, good communication throughout the management transfer process can help each party understand the expectations of the other one. When possible, a period of joint control is an ideal opportunity to set common objectives and ensure the success of the transition.
  2. In any type of transfer process, it is advisable to call on experts (lawyers, tax consultants, financial planners, and organizational psychologists) during the ownership transfer process. These experts will help you negotiate the terms and conditions of the ownership transfer and the sale of the business from a financial, a tax, and a legal perspective, while at the same time fostering dialogue with the incumbent(s). In the case of a transfer within the family, it is advisable to have your own experts so that your interests are well represented.

Avenues of reflection for facing these challenges

  • What strengths, skills, competencies, and experience have you already acquired?
  • Do you have an entrepreneurial spirit?
    • Which of your qualities will help you undertake and successfully complete the business transfer process?
  • What are your weaknesses?
    • How could these weaknesses affect your capacity to take control of the targeted business?
    • What could you do to transform your weaknesses into strengths? Obtain training? Acquire experience in the industry?

To develop a better understanding of your interests and your personality traits, and to begin reflecting on your strengths and weaknesses as a successor or buyer, do the Quiz: Discover Your Successor Profile.

  • What are your financial objectives?
    • If you are taking over a family business, is there an estate freeze?
    • If you are taking over an SME, is there a preliminary agreement with the incumbents? With a financial institution?
  • What do you expect from the outgoing managing director?
  • What do you expect from your future employees?
  • How do you see the future of the business?
  • Make a list of the requirements for the coveted position in terms of the knowledge and experience (academic training, external and internal experience) that are needed, as well as in terms of the competencies (leadership style, judgement) and the attitudes and values (open-mindedness, respect, entrepreneurial spirit) that it is necessary to have.
  • Evaluate where you currently stand with respect to this list of requirements.
  • To help you evaluate your competencies, you can call on specialists such as management consultants and human resources advisors.
  • What knowledge and competencies does the incumbent consider necessary for taking on his or her position and for filling the void that his or her departure will create?
  • How will your performance and your ability to assume your role as the successor be assessed?
  • Are you the only potential successor?
  • To develop a better understanding of the incumbent, and his or her expectations and personality traits, ask him or her to do the Quiz: Discover Your Incumbent Profile.

If you are a successor from the family or a successor who is an employee,

  • Ensure that you communicate clearly your intention to take over the business.
  • Have the current managing director corroborate a plan for training and the development of competencies to meet the requirements for the coveted position.
  • A mentor or a coach may be extremely useful if the current managing director does not have the necessary skills or the required time to oversee your preparation for your new responsibilities.
  • You can also consider working on a strategic plan to help you outline the overall orientation of the business and specify its goals as well as the means of achieving them.
  • This exercise in strategic planning requires an in-depth examination of the current situation of the business, its opportunities, and any threats that it faces. Creating a strategic plan will allow you to determine the competencies that you will need to oversee the development of the business. In addition, the strategic plan will be very useful when it comes time to finance the ownership transfer.
  • Use the Lifepath tool to align your interests, your expectations, and your objectives.

If you are taking over an SME from a third party,

  • The strategy for preparing to take over the business is often shorter and less elaborate.
  • It is also possible to have a mentor help you reflect on issues throughout the transfer process.
  • Do not overlook the knowledge and the competencies of the current employees of the business. Many of these employees will turn out to be key to the success of the transfer process. They will be able to provide essential tacit information that will help you make wise decisions, and they will also help ensure that daily operations at the business run smoothly.
  • Spend time becoming well acquainted with the associations connected to your industry so that you can familiarize yourself with your new business and its environment more rapidly.

If you are a successor from the family or a successor who is an employee,

  • These decisions belong to the current managing director. However, discussion is essential to ensure that your expectations align with those of the incumbent.
  • Depending on the management style of the incumbent, the transition period can be more or less long. To develop a better understanding of your challenges during the transition period, do the quiz! And ask the incumbent to do the quiz as well!
  • Although a date that is fairly far away can help ensure that there is sufficient time for a satisfactory transfer of knowledge, competencies, and power, it is sometimes difficult for a founder or a parent to step aside and let one of his or her children or employees take over the reins. Yet it is essential not to delay this moment unduly.

If you are taking over an SME from a third party,

  • The disengagement strategy and the incumbent’s departure date will be specified in the contract for the purchase and sale of the business.
  • Very frequently, an issue is specified in order to facilitate the transition.