Company succession

Taking over a company – offers


During the initial, introductory consultation, you will receive the initial information on independence and/or event offerings. Remember that the business may also need to be re-registered. You can also do this in the Service Centre.

In-depth consultation

If you have already found a specific company that you wish to acquire, use the in-depth consultation service offered by our succession advisors in the Founding Centre. Here you can find some tips to help you get started, including what you need to consider when taking over a company, checklists and a guide on finding a purchase price.
The questions you should ask yourself when planning an acquisition include:
  • Will you need to carry out modernisation or alteration works or make additional investments as part of the acquisition?
  • Is the basis of the business you plan to acquire sound (revenues, customer and supplier structures, competitive situation)?
  • Is the product or service still marketable and/or futureproof?
  • How do I calculate a purchase price and how will I finance the acquisition? 

Founding a company with expert knowledge

If the acquisition has been agreed in concrete terms and you need to borrow capital, you will also need to draft a business plan as part of the acquisition. You can use our free Business Workshop Germany tool to do this.
The Business Workshop will support you with planning and implementing the founding of your company – as a neutral, confidential service that is offered free of charge.
It is more than a founders’ portal: in it you can successfully implement your acquisition and start-up. Register now and enjoy the many benefits:
  • Develop your business and financing plans.
  • Save your results in the protected area of your Business Workshop account. 
  • Use your personal online tutor for questions.

Nexxt-Change business exchange

Still looking for a suitable business? The search for the “right” company is often a difficult undertaking. Founders may not know what options are available or how they should get hold of the relevant contact persons. We will also be happy to offer you advice on this.
The Nexxt-Change business exchange (a joint initiative of the Chambers of Industry and Commerce, the Chambers of Crafts, KfW-Mittelstandsbank and the German Federal Ministry for Economic Affairs and Climate Action) will help you look for suitable businesses.
As Germany’s largest national business exchange, the platform amalgamates and publishes all regional offers.
If you wish to search for a company or offer a company for sale, please fill out the online registration form, which can be found on the Nexxt-Change website.
Tip: Hamburg Chamber of Commerce offers a wide range of information for all those concerned with the succession of a business.

Checklist for junior entrepreneurs

Before an acquisition, it is necessary to perform an in-depth review of the business to be acquired. In this context, the following questions should be taken into account: How has the company performed over the last five years in terms of revenue, capital structure, profitability, customer structure and competitive situation?

Calculating the value of a company

Agreeing a purchase price is one of the greatest obstacles when it comes to company succession. The person transferring the company wants to achieve the highest possible purchase price based not only on the asset value and earnings value, but also on the significant amount of hard work they have invested in the company throughout their entire working life. The buyer, on the other hand, wants to pay as little as possible. After all, they will need to pay interest and amortisation payments to finance the purchase price and also need to ensure that liquid funds are still available for the expansion of the company.
In practice, there is a range of valuation methods that can be applied, but each of them will yield a different result. Clearly then, there is no ONE objective company value. The valuation methods only provide a starting point for negotiating the purchase price. Ultimately, it is up to the buyer and seller to agree on a purchase price.
Initially, financing is a matter for both parties to clarify, but other stakeholders also play a role. If you are borrowing to finance the acquisition, the bank will also decide whether it views the investment as justified. In the case of a divorce, the counterparty will base their actions on their personal intentions. Relatives, the tax office and consultants will also have their own views regarding the value of a company.
If a purchase price is too high, this poses a double risk for the company.
  • On the one hand, it makes it difficult to find a successor who is prepared and able to pay the high purchase price,
  • while on the other, there is a risk that the company founder will take on a significant financial burden due to the excessive purchase price and the associated financing costs and/or that the company will exceed its debt servicing capabilities. This would jeopardise the continued existence of the company.
Nevertheless, there are a number of recognised methods for calculating the value of a company. This figure can at least be used as a starting point for consultations.
The most important valuation methods are:
  • the income approach
  • the intrinsic value method
  • the sales comparison approach
  • valuation using multiples
  • as well as various sub-forms and combinations of the above procedures.
None of these methods can be labelled right or wrong. In practice, the income is generally used as a basis.
We recommend appointing a specialised business consultant or other expert to get an independent company valuation. They will prepare a neutral valuation report, which then serves as the basis for negotiating a purchase price between the buyer and the seller. When selecting an external consultant, their experience in the area of company valuations and their knowledge of the market and industry situation of the company to be valued are both important factors.

Company transfer

The following section outlines the various forms the handover can take. You should discuss the different variants and their consequences with your advisor, tax consultants, solicitor and family.

1. A successor from within the family or external succession planning?

A family member is the obvious first choice when handing over the company. However, it is important to provide detailed information and facilitate a joint, open discussion among all members of the family to avoid the classic generational conflicts that such decisions may invoke.
In any case, we recommend making use of our handover consultation service.
The following forms of succession planning can be used for both internal family succession and external solutions.
  • Sale for a one-off payment
  • Sale in return for recurring benefits, e.g. pension, instalments or long-term liens.
  • Succession planning in the context of the anticipated succession
  • Gradual handover to family members through the founding of a partnership or capital company
TIP: As a successor, you should take over your own areas of responsibility soon after joining the family-run company, and should expand these constantly. It is imperative that you are perceived as an independent future boss! Only then can you also gain the trust of employees and business partners.

2. Sale

The sale of a company is a complex task and must therefore be prepared strategically. The more well-organised and well-structured a company is, the more easily it can be sold. The necessary preparations take time. Any shortfalls in preparation will weaken your negotiating position and negatively impact the purchase price. The time and reason for the sale are decisive factors in determining the purchase price to be achieved.
After a personal discussion, we can offer you a non-disclosure agreement template and a due diligence checklist.
The following section outlines several forms of company sale.

Sale for a one-off payment

The company is sold to a successor for a one-off payment. In this scenario, the seller is not dependent on the successor’s entrepreneurial skill; the seller has immediate power of disposal.

Sale in return for recurring benefits

The successor does not pay the agreed purchase price in one go. Instead, the purchase price is paid over a longer period in the form of a pension, instalments or a long-term allowance. The advantage for the buyer is that they are not necessarily dependent on borrowing. On the other hand, the disadvantage is that the seller is dependent on how well their successor prospers. However, recurring benefits can also be secured by means of a mortgage.
  • When a business is sold in return for an annuity, a distinction is made between an annuity in consideration of property alienation (Veräusserungsrente) and a pension annuity (Versorgungsrente). If the annuity payment is appropriate compensation for the transferring company, this is an annuity in consideration of property alienation (Veräusserungsrente). However, if the annuity serves primarily to safeguard the livelihood of the outgoing entrepreneur, this is referred to as a pension annuity (Versorgungsrente). Both forms can take the form of a lifelong annuity (the duration is based on the lifetime of one or multiple people) or a fixed-term annuity (fixed duration).
  • If the company is sold in return for payment in instalments, the purchase price is broken down into partial amounts, making financing easier for the successor. The payments are spread over a set period, which is clearly defined in advance.
  • A long-term allowance consists of recurring payments over a minimum period of ten years. In particular, long-term allowances differ from pensions in that they do not presuppose any uniform or consistent payments. For example, they may be based on the company turnover or on the living expenses of the seller.
  • Gradual transfer through the founding of a partnership or capital company
The gradual transfer of a company to family members or persons external to the family can also take place by means of founding a partnership or capital company. The benefit of this is that the handover can occur in stages. The successor is involved with the company and becomes a co-shareholder as a result.

3. Leasing

In all cases when a company is sold and also when it is given as a gift, the property passes to the successor. If the company owner is not or not yet ready to take this step, there is the option of leasing the company. This guarantees a regular income for the business owner.

4. Renting

In the case of renting, the successor is generally only given use of the business premises for a fee. In this case, unlike leasing, the successor buys the equipment and machinery, for example. From a tax perspective, however, this constitutes the termination of the company and the hidden assets must therefore be liquidated and the associated tax paid.

5. Management buyout (MBO)

If no successor is found within the family, the company may be sold to its management. The advantage: the new owner is extremely familiar with the company. This may simplify the sales negotiations and may also significantly reduce the risk of subsequent claims (e.g. warranty claims or claims of fraud). The disadvantage: less innovation can be expected in the company due to “operational blindness”.

6. Management buy-in (MBI)

When a company is taken over by external managers, this is referred to as a management buy-in. The advantage: the new owner will bring fresh momentum to the company. The disadvantage: it takes longer for the new owner to become familiar with the company. It is also possible to opt for a blend of management buyout and management buy-in. For example, this may be a practical alternative if the internal managers cannot raise sufficient capital by themselves.

7. Foundation (Stiftung)

Establishing a foundation is a suitable option where the owner wishes to maintain the company independently of their descendants. The special feature of a foundation is that it does not require any owners or shareholders. The foundation belongs to itself, so to speak. Its legal independence is defined in Sections 80 to 88 of the Civil Code (Bürgerliches Gesetzbuch (BGB)). The legal separation of the foundation’s assets from its founder and their descendants is characteristic for this scenario. The heirs are excluded from company succession; that is, they are effectively “disinherited”. The company is not divided up into individual portions for inheritance, but instead remains intact through the foundation. The foundation is a highly versatile legal form, with very few mandatory requirements defined in the relevant legislation.
One form of the foundation is what is known as a double foundation (Doppelstiftung) – a combination of a charitable foundation (gemeinnützige Stiftung) and a family foundation (Familienstiftung). If you opt for a double foundation, you will still have a say but can also minimise your inheritance tax and wealth tax.

8. Founding an employee cooperative (Mitarbeiter-Genossenschaft)

In cases where employees decide to acquire the company collectively, founding a cooperative can offer a good alternative to founding a GmbH (limited liability company). Advantages include the collective structure of accountability and the distribution of capital to individual employees. However, the condition for this option is that there must be good cohesion among the staff and a sufficient number of people willing to take responsibility. 

9. Going public

When planning succession and as a means of easing the search for a suitable successor, it can sometimes make sense to dissolve the unity of shareholder and management. One option here is to change the company into an Aktiengesellschaft (public limited company). However, the public offering of a company is subject to certain minimum requirements.

Examples of successful company succession

A 2010 study by the Institut für Mittelstandsforschung in Bonn found that by 2018 alone, almost 4,500 valuable owner- and family-run businesses in Hamburg will have to clarify their company succession. These companies not only represent significant value creation, but also employ around 53,000 people.
Preserving these companies beyond the currently active generation of business owners is an important challenge for our city; after all, owner- and family-run companies contribute significantly to the economic performance of the SME sector. In addition, many family-run companies offer an exemplary embodiment of “traditional SME virtues” such as
  • connectedness to the location,
  • sustainable management and
  • a close bond between the company and its employees.
All of these things are of great importance for Hamburg because the density of old family-run businesses, some of them spanning numerous generations, is particularly high here.
The challenge of mastering company succession: 10 successful examples from Hamburg owner- and family-run companies.