Deciding to stop doing business does not necessarily mean the end of a business activity. Transferring ownership of a company will preserve its achievements in terms of market presence, skills and jobs.
About 450 000 firms are transferred every year in Europe. It is estimated that one-third of these firms, representing 600 000 jobs, may be lost every year.
It is also estimated that one-third of European business owners - with some 690 000 businesses, providing 2.8 million jobs, will retire in the coming years.
There is a risk that many of these thriving firms will not be taken over - unless the owners make proper preparations for their retirement and overcome the difficulties involved in transferring ownership.
Preparing for a transfer is a particularly complex process. Owners very often have neither the knowledge nor the experience to deal with the complex legislation, taxation and administrative formalities it involves. Many also face a psychological barrier to handing over their company.
To improve conditions for transfers of ownership, the European Commission has recommended various measures to the authorities in EU countries.
In its Communication "A review of the Small Business Act", the Commission asked EU countries to:
- develop user-friendly and widely supported marketplaces and databases for transferable businesses;
- provide training and support to increase the number of successful business transfers, including communication campaigns to raise awareness of the need for early preparation of business transfers.
Ensuring access to finance
Transferring ownership actually requires more financing than starting a business. Loans, guarantees and start-up facilities should be available not only for setting up new businesses, but also for taking over existing ones. Owners need to be better informed about mezzanine finance (combining loans and equity) - particularly suitable for business transfers.
Raising awareness and support mentoring
More companies could be handed over by retiring owners, if they prepared the transfer of ownership properly in advance.
The complexity of these operations makes practical assistance vital throughout the procedure.
National authorities should also actively promote and support mentoring schemes provided by chambers of commerce, guilds and similar bodies.
Organising transparent markets for business transfers
The matchmaking between potential sellers and buyers should be supported by transparent services. Such services have to go beyond mere databases listing available businesses and offer a comprehensive mediation service for smooth transfers in a spirit of partnership.
Ensuring transfer-friendly tax systems
These can take one of any number of forms:
A 2006 Communication from the European Commission suggested almost half of EU countries had not implemented its 1994 recommendations to this effect. More needs to be done in each country to address business transfer needs.
Check also the legislation on this topic in: