Plenary Session and Workshops Andr Douette - Member of the Board of - - PowerPoint PPT Presentation

09.45 > 10.45 Plenary Session

Main Lessons from Plenary Session and Workshops

André Douette - Member of the Board of the Federation of European and International Associations, Belgium Julie Lebèque - Manager, SOCAMUT, Belgium Toni Brunello - CEO, StudioCentroVeneto, Italy Marc Dufosset - Partner, Copilot, Belgium Maurice Olivier - CEO, BlueOcean Venture, Switzerland

Main Lessons from Plenary Session 1

Introduction & global view of SME transfers: economic impact and policy measures

André Douette Member of the Board of the Federation of European and International Associations

Plenary Session 24 May First session

• TOUGH TIMES ! ALARMING NEWS!

– SMEs more affected than LE by 2008-2010 crisis as « employment decreased more quickly » (Snijders) – Although the analysis of hurdles against Business Transfer and recommendations date back to 2014, « every year Europe may be losing approximately 15.000 firms » (Urresti) – Member states are slow to implement EU policy measures « only 5 should have reached the 75% » (Urresti) – Macro-economic odds are against us : volatile context of Eurozone, Basel III « cumbersome for business transmission », « situation will remain concerning in the medium term »… ( Ledent) – The SME transfer market is not efficient « too few data are collected » (Buisson)

Plenary Session 24 May First session

• WILL THE SITUATION OF BUSINESS TRANSFER

DEFINITIVELY IMPROVE AFTER… ?

– The crisis is over – Most of the 20 million EU businesses will have taken innovation as driving force – Member states have embedded in laws and practices the 1994 EU recommendations ???? NO!

Plenary Session 24 May First session

• WHICH POINTS HAVE BEEN PUT UPFRONT BY

SPEAKERS AND PANNELISTS ?

• 1. Knowledge of the market value of the company

Ledent « the valuation of the business in times of uncertainty, with huge national discepancies » Buisson « we follow the market quarterly and over the dime, significant differences (Value = a multiple of EBIDTA; froù 5,5 to 9 x and down to 7,5 x last two years) Di Bartolomeo: « Within Transeo, we need some guidelines and benchmarks validades by our professional members ».

Plenary Session 24 May First session

• Proposals (2)
• 2. Accumulate data and information in order to take the

righ steps

Urresti: collecting more information on business transfer is part of the policy lines to be launched by the Commission Casado: family businesses have a very specific culture : long term perspective, capitalisation > profit distribution… « we need benchmarks » Di Bartolomeo: « Transeo wants to develop a barometer as a scientific tool to be worked out with the European Commission »

Plenary Session 24 May Second session

• TOPIC : POTENTIAL SELLERS HOW TO FIND THEM AND

RAISE THEIR AWARENESS

– Optimistic overview with plenty of accurate observations and a lot of suggestions – Started with the presentation of Birgit Felden who reported about her personal experience, with an academic background and looking at the instruments put in place in Germany… even if each facet of the process is a bottleneck ! ☺ ☺ – Some conclusions…

Plenary Session 24 May Second session

• DISCRIMINATE TARGET GROUPS

– Oikarinen: « in Finland, we are not concentrating on aging entrepreneurs only; the market is much wider »… – Felden: « different designation of target groups: specify the approaches. Are you sure that you have the most adapted approach for the various market clusters? » – All: never forget the various motivations, the emotional content behind the transaction…

Plenary Session 24 May Second session

• NETWORKING

– Felden « in Germany, we have private and public instruments, probably addressing different market classes. The integration of the channels is key » – Margreve: « Sowaccess, the Walloon platform is closely cooperating with Chambers of Commerce, entrepreneurial Associations » – Arens : » in Luxemburg, we have a number of cross border transactions for which banks, consultancy firms –bigger or smaller

• nes- are co-operating

Plenary Session 24 May Second session

• SOME PEARLS COLLECTED HERE AND THERE…

– Oikarinen: « Transfering a business should not any longer be THE magical moment, but just an opportunity in the business life cycle » – Dolcetta, the serial entrepreneur: « you should have a project when you make an acquisition; create trust with the seller and take your dinner in his daughter’s restaurant!. The support of consultants (not the biggest…) is important » – Felden: « raise innovation through innovative media » – Di Bartolomeo »public authorities do their very best. However, sometimes, political measures can add constraints » – Urresti: « to the 13 recommendations of 1994, we have just added one: ensuring the market transparency »

Plenary Session 24 May Summary

• The opinion of an outsider : sentences which I would have wished

to hear

– EU Commission: « we will do our best to raise awareness. We shall not do it by

• rganising a one shot conference in all European Capital cities but we will

concentrate rather on professional advisors, close to businessmen and on whom we will lean in a long term perspective » – EU Commission: « let’s try to organise clear and trusty market places: safe, accessible and efficient platfoms and in a very next step, we shall create their cross- border linkage » – EU Commission: « the next multiannual programme shall include a financial window to ease access to finance in takeover transactions » – Bankers: « we are squeezed by our margin but we shall take some time for a closer look on the business of the baker round the corner who is about to sell his shop ».

Plenary Session 24 May Summary

Thank you for your attention. André Douette

Workshop 1

Valuation of SMEs: how to take up the challenge?

Julie Lebèque Operations Manager, SOCAMUT Belgium

Obstacles

• No regulation – free profession, free market
• Difficult for entrepreneurs to judge the quality of the

services provided by experts

• Emotional value of business =>SMEs overpriced
• No prior valuation
• Sellers are afraid to tell a price

Obstacles

• No standards for valuation of SMEs
• Valuation of SMEs are different from valuation of larger

companies:

• Lack of information in financial statements
• No public reference for market value
• Illiquidity of the shares  listed companies
• Strong dependance on owner => going-concern risk
• Non diversification risk

Possible solutions

• Certification for valuation experts
• Valuation standards for SMEs with a market approach
• Raise awareness among SME owners about fair market

value concepts  Develop a knowledge platform with information, success stories, tools…

Things to keep in mind

• Difference between value and price
• Difference between buyer and seller valuation
• Important for the company to grow after the transfer

Workshop 2

The impact of emotions in the transfer process

Toni Brunello CEO, StudioCentroVeneto Italy

Workshop: The impact of emotions on business transfer

• Very open overview on the issue

Talking of LOVE From “Emotions-as-winds” to Challenging emotions measurement

Annika Hall, Maarten De Kimmenade, Sylvie Huard, Edwin Weesie François Martineau Moderator:Toni Brunello

We should “mentally migrate” from Transfers = rational - to Transitions = emotional

6% (!) of all companies are sold in order to avoid family conflict

(De Kimmenade research, 2003)

IF NOT… WHAT? (diffidence in dealing)

A “rational” questionnaire has been proposed (coming from Canada) in order to better analyse the specific issues for the transfer After such a first “technological tool”, A set of new knowledge tools has been proposed, in order to classify -

• and then to better understand emotions, like…

The basic aim should be to measure human emotions……… For a deal, the testimonial advises to get a 3 - year work coaching!……

The final disagreement

We should control emotions From here, a new beginning…. Let us gooo!

Workshop 3

Legal aspects: identifying good practices in business transfers

Marc Dufosset Partner, Copilot Belgium

Main ideas

• a. Important to go through every step of the transmission process
• b. At every, legal pitfalls are possible. A certain number of good

practices can be used to avoid these pitfalls c. Even though many many legal issues are common to many national laws, the emphasis on them differs a lot from state to state

• d. Cultural and language differences, as well as different legal

concepts, make cross-border transactions harder

Important to go through every step of the transmission process

– Strategic decisions – Preparatory work – Letter of intent – Reach an agreement ….. ! Seller’s liabilty

Legal pitfalls

– Bank covenants – Employment matters – Pollution – Manage expectations on the disclosure of data room (increase of virtual data rooms) – Knowledge qualifiers – Seller’s liability – Buyer’s liability – Tax audits – Pending lawsuits

Maurice Olivier CEO, BlueOcean Ventures Switzerland

Workshop 4

Private and public financing for the acquisition of SMEs

Workshop 4 : Overall View

• Five thought-provoking presentations on the financing

aspects of SME transfers

• Emphasizing how the different players and instruments

interact (government agencies, banks, private equity funds, « angels », etc.)

Role of Government

• Essential : Guarantees to banks
• Direct loans and/or equity investment
• Personal loans/soft loans/« patient capital » (OSEO)
• Trend/need to increase interface with PE/VC players

– Mitigate risk of PE players (e.g. guarantee) ?

Private Equity Players

• PE funds, family offices, private investors
• Strong expectation re. exit and ROI (« average/upside ») - but : are all

PE’s the same ?

• Limited role today - but worth considering
• Can « complement » a transaction
• Not clear whether PE’s increase or mitigate risks !
• Side notes :

– Frequent exit from PE’s to other PE’s (UK) - succession of exits – Guarantee for selected PE investors (e.g. OSEO) ?

Recommendations for Buyers and Sellers

• Combine all sources to increase total leverage to own funds
• Be patient, negotiate ad nauseam
• Seek maximum government guarantee
• Use strong EBITDA to improve leverage
• Check about soft money
• Enlist investment by PE players if you can
• Remind : financing hurdles should not kill a « good » deal
• Sellers : work also with your private banker (if you have one) !

12.00 > 12.30 Plenary Session

Transeo Academic Award

Jean-Pierre Di Bartolomeo, Chairman Rosalie van Rijk, Member of the Board Jean-Marie Catabelle, Member of the Board Transeo Association

Scientific Working Group

• Celine Barredy (Université Montesquieu, Bordeaux)
• Claudio Cacciamani (Università Parma)
• Jerzy Cieślik (Kozminski University, Warsaw)
• Didier van Caillie (HEC, Liège)
• Lex van Teeffelen (HU Business School Utrecht)
• Laurent Renerken (Transeo)

Selection procedure

• 13 submitted papers
• Two academic review rounds

– First round five best papers selected – Second round 4 reviewers selected the three best papers

• One Transeo Board review round

– Added value of the paper for professional experts – Opportunity for Transeo to be known in new countries – Contribution of the paper on the European debate (use in position papers for EU decision-makers)

• Unanimous decision on first price.

Prices

Presentation Master Class 2 First price: € 2.500 Second price: € 1.250 Third price: € 500 Papers will be published in Transeo proceedings.

Three laureates alphabetically

• Francesco Chirico, Carlo Salvato & Pramodita Sharma

A farewell to the business: Championing exit and continuity in entrepreneurial family firms.

• Christina Constantinidis & Teresa Nelson

Integrating succession and gender issues from the perspective of the daughter of family enterprise: A cross-national investigation.

• Susanne Durst

Small and medium-sized enterprises’ succession process: Do intangible assets matter?

Third price

“The topic is new and in fact poses many questions about the specifics of the transfer of a business when the successor is a woman.”

Runner up (second price)

“An excellent example of transforming rather than transferring a family firm, when a new generation takes over.”

The winning paper

“Very interesting article with real contributions and I thank the author for this contribution.” “Very practical information.”

12.00 > 12.30 Plenary Session

Closing speeches : view on the future challenges for the SME transfer sector and for Transeo Association

Jean-Pierre Di Bartolomeo, Chairman Rosalie van Rijk, Member of the Board Jean-Marie Catabelle, Member of the Board Transeo Association