As a rule of thumb, the more independently a company is already running without its current managing partner, the shorter the transfer period can be in which management is handed over.
In addition, the following questions play a key role:
– Has a second management level already been established?
– Is the sale to a financial investor or a strategic buyer to be realized?
For an orderly handover of the management with an already established, well-functioning second management level, however, a period of at least 6 months should be expected. In addition, there are about 6-12 months for a structured transaction process. Thus, a sale should be initiated at least 1-2.5 years before a planned departure.
Of course, it is also possible for the departing managing partner to continue to be involved in the company, as financial investors in particular generally appreciate the know-how of the former management and are therefore happy to offer him an advisory role. Consequently, the former managing director is still involved in the company with a lower workload and can provide the company with his experience.
In general, it can be stated that an entrepreneur should not plan too tightly and that a sufficient transition phase should be factored in. However, this also depends on the particular situation and whether a sale to a financial investor or a strategic buyer is being sought.
Second management level as a criterion
For financial investors, the quality of the second management level is often an important criterion. If this is well established, for example through one or more authorized signatories who have been with the company for many years, the transition phase is much shorter. This is because a significant part of the training can then be dispensed with, and a transfer of management can be implemented relatively quickly (around 6-12 months). In addition, it is possible to give former employees from the second management tier a stake in the company as part of the sale, thus creating appropriate incentives aimed at the well-being of the company.
However, if no qualified second management level has been established in a company before it is to be sold to a financial investor, a transition phase of several years is to be assumed. During this period, a new management team must be found and subsequently trained in the company. It therefore takes considerably longer after the departure of a managing partner to be able to successfully run a company on a sustainable basis without a qualified second management level.
The process is somewhat different in the case of a sale to a strategic investor. However, integration into the organizational structure of the buying company usually takes place. This usually takes place within the framework of a 360-day plan, which serves to transfer the administrative and operational processes of a company completely into the structure of the buyer. Accordingly, a comprehensive management is no longer absolutely necessary.
Conclusion
In summary, it can be assumed that there will be a minimum lead time of 6-12 months from the decision to the sale. This period is supplemented by the management transition phase, which can last from 6 months to several years. Therefore, as a management it is essential to tackle a succession solution at an early stage if this cannot be realized within the family.