Company succession through management buyout (MBO)

The calculation of value must not be forgotten when estimating value

In many companies, succession is managed internally. When employees become co-entrepreneurs, this is not only a sign of appreciation, it also changes the roles of everyone involved. Things also have to run smoothly behind the scenes: valuation, financing and taxes. Value is not the same as price, but neither is value the same as value.

Introduction

Traditional company succession takes place within the family. If this is not an option, the focus shifts to a sale to employees or external parties. Once the choice has been made in favor of employees, everyone involved and the company as a whole must prepare for this change of role. This is first and foremost a question of culture and strategy, then of structure and implementation.

Transparency and openness are required. This applies to the way people interact with each other, but also to the figures. In addition to emotions and feelings, everyone involved also has financial goals and expectations. It is therefore of little use talking about takeover structures, participation models or tax arrangements if the key variable in the equation – the purchase price – is unknown.

Declarations of intent such as “It’s not just about the money” or “We’ll find a solution” don’t help either; concrete value considerations in the form of a company valuation are required. Tax aspects and financial viability must also be kept in mind. And, of course, emotions are also involved. In order to reconcile all of this, professional support from succession experts can be useful.

Read the full article from EXPERT FOCUS TREUHAND March|2025 here.