In this context, a broad survey conducted by the UCM in October 2013, summarized in La Libre Entreprise on March 23, 2014, concluded that more than 55% of businesses will be up for transfer within 5 years, and two-thirds of them have no buyer in sight. Furthermore, transfers to third parties are preferred (55.2%) over transfers to family members (12%). These figures are all the more striking given that as early as 2006, according to a study by the Family Business Institute (IEF), one-third of business leaders were over 60 years old, and 80% of family businesses were set to change hands over the following ten years—while only 45% were preparing for this transition.
Should we therefore conclude that nothing is being done in this area? Far from it. A number of initiatives have emerged in recent years to facilitate business transfers. For instance, several online platforms now exist to help sellers and buyers connect. While a perfect match is obviously not guaranteed by such tools, they often allow prospective buyers to identify target companies matching their search profile much faster. Although business acquisition remains a fairly technical subject, information has now become widely accessible.
Numerous seminars, press articles, and websites allow prospective buyers and sellers to educate themselves. Training programs are also available, such as the Club des Repreneurs, which cover the various aspects of business acquisitions and allow candidates to share their experiences. Sowaccess, as the key facilitator of business transfers in Wallonia, is at the forefront of most of these initiatives. It has also introduced specific financial support mechanisms (Diagnostic Cession and Test Repreneur), enabling business owners to receive subsidies for professional guidance.
So, what are the obstacles to business sales that cause so many companies to fail to transfer or face severe difficulties doing so? Why do some business owners advise their children against taking over the reins?
The causes of this shortfall are manifold, but it seems that the main barrier lies in the declining attractiveness of being a business owner.
The weak financial health of companies up for sale has not escaped anyone's attention, and the UCM survey clearly reveals it. Our small businesses in particular—already thinly capitalized and showing low profitability—have been hit hard by the economic crisis. Far from the popular myth, many business owners are actually in a fragile financial position, overwhelmed by debt as well as tax and social security obligations. When times get tough, the first expense line item to be cut is often the owner's own compensation. Today, it is not uncommon for a business leader to be earning less than their employees—not just on an hourly rate basis, but sometimes even in absolute terms.
This financial stress is often compounded by a deep sense of discouragement in the face of administrative complexities. In a small company, the owner cannot afford to hire specialists of all kinds and must therefore deal personally with endless mailings, forms, inspections, and regulatory compliance requirements.
It must also be recognized that support structures for business transfers tend to focus on established SMEs rather than micro-enterprises. Most M&A advisory firms do not handle small-scale businesses, where the workload is essentially the same but the advisory fees are significantly lower. Buyers themselves typically seek targets that meet a minimum size threshold.
We should therefore welcome the fact that the UCM, speaking on behalf of micro-enterprises and the self-employed, is championing this cause and bringing it to the agenda of the incoming government with concrete proposals. Will they be heard? Beyond any political or ideological divides, there must be a collective realization that those who still dare to take risks, take on debt, and work hard today need to be encouraged. They must be allowed to reap the rewards of their labor, for the ultimate benefit of all stakeholders involved in the businesses they lead.
Illustration: Clou
