A new survey identifies the main challenges for advisers of owner-managed businesses

A new questionnaire survey released by the Centre for Owner-Managed Businesses uncovers the advisers' experience with counselling on long-term planning and mergers and acquisitions in owner-managed businesses.

01/15/2016

Advisers for the owner-managed businesses estimate that 42% of the owner-managed businesses they have advised in the past year are facing a possible change of ownership. But according to the advisers only 17% of the businesses have a plan for the future ownership and management of the company. The advisers emphasize two main challenges in advising about ownership: the owner managers do not want to give up control of the companies and the owner managers have an unrealistic idea of the economic value of the business. These are the results of a small survey by 169 advisers to Danish owner-managed businesses, made by the Centre for Owner-Managed Businesses.

The future and opportunities of the businesses
The survey shows that 72% of the advisers see it "very much" as their role to help the owner-managed businesses to have a plan for future ownership and management of the businesses, but the businesses are not prepared for the future, and some of them might not even be able to transfer ownership. The advisers estimate that 24% of the owner-managed business they are in contact with cannot even transfer ownership due to lack of value creation, person-goodwill or outdated business models. In contrast to that, the advisers assess that 27% of the owner-managed businesses would benefit from the acquisition of another company, as part of the consolidation, etc. The advisers are only aware that 10% of the owner managers have active plans or wishes for an acquisition of another company.

The main challenges
To identify which challenges advisers find the hardest when advising on transfer of ownership, they have been asked: "Which challenges do you meet when you advise owner managers about the change of ownership, future ownership and the management of their businesses"?

According to the advisers the main challenges are:
1. The owner managers do not want to give up their control of the companies (64%)
2. The owner managers have an unrealistic idea about the economic value of the businesses (62%)
3. It is difficult to identify buyers for the businesses (52%)

Secondly, the biggest challenges are:

  • It is difficult to prepare the business for sale in company of the owner manager (44%)
  • The owner managers are uncertain about their own future and the possibility for their continuing involvement (43.8%)
  • The owner managers have all of their assets invested in the company (43.8%)

In addition, 40% answered that "Either there is no board or there are no people in the board with the right competencies to work with”

The survey
In September the Centre for Owner-Managed Businesses sent out a questionnaire to advisers for Danish owner-managed businesses and received 169 responses. The questionnaire was designed to uncover the advisers’ experience with counselling on long-term planning and mergers and acquisitions of owner-managed businesses. Furthermore, the purpose of the questionnaire was to identify the need for, and design of, a specialized education for advisers in the field. The study was fairly even distributed between accountants, lawyers, advisers in banks and other advisers of owner-managed businesses.

The page was last edited by: Centre for Owner-Managed Businesses // 10/08/2019