For budding entrepreneurs, it is often forgotten that starting a new firm is not the only way to go into business. Every year, thousands of existing small businesses close down, as their owners retire or seek new challenges, but cannot find anybody to take on the firm. Ensuring a smooth handover is a long and sometimes complex process, but making it simpler would reduce much of the 'waste' - of skills, jobs, market presence and goodwill - when such a business closes down, acording to European Commission: Smooth transfer of businesses Study
Preparing for a business transfer can take several years of preparation, but many owners face a psychological hurdle when it comes to selling off the family firm. If no obvious successor is present, too many put off the preparations, beginning the transfer of know-how and skills too late, or not at all. This may not only reduce the value of the business to the outgoing owner, but also jeopardise the plans of the buyer or successor. And with an estimated 450,000 businesses, providing 2 million jobs, being transferred in the EU every year, Europe needs to make it easier to transfer businesses and develop more effective support services.
2013 Study on Evaluation of the Implementation of the 2006 Commission Communication on Business Transfers
In view of the current economic circumstances and the need to make every effort to facilitate business activity and employment, the Commission has decided to identify remaining barriers in the relevant regulatory and administrative environment affecting business transfers. In this context, a study on Evaluation of the Implementation of the 2006 Communication on business transfers was undertaken along with convening a Member States expert group that provided valuable information about their respective countries' policies and actions in this area. The study and expert group work concluded that significant progress has been made over the years in relation to many aspects of the problems associated with business transfer, but that the situation across Europe remains variable.
One of the main recommendations arising from this analysis is the need for a view of business transfer as an event in the development of a business that can happen at any time, not just when an owner is reaching retirement. More importantly, it should be perceived as an opportunity in the process of re-allocating resources and restructuring productive assets.
The study clearly showed that the areas with the highest success rates are those relating to changes of the regulatory environment; therefore attention now needs to move towards awareness-raising activities, business support services and measures facilitating access to finance and taxation.
The study is available here
2014 Feb, 20