What is business succession?
The business succession involves the transfer of management and/or ownership of a company to a successor. It is one of the most critical moments in a company’s lifecycle—and at the same time, a strategic opportunity for renewal.
A wave of successions is expected in Austria in the coming years: According to the WKO, thousands of medium-sized enterprises are affected. Around one-third of all handovers fail or lead to closure—often because planning starts too late or no suitable successor is found.
Forms of succession
- Intra-family succession: Handover to children or relatives—classic, but not always possible or sensible
- Management Buy-out (MBO): Takeover by existing executives—advantage: continuity and company knowledge
- Management Buy-in (MBI): Takeover by external managers—brings a fresh perspective and new competencies
- External succession / Sale: Sale to third parties, strategic investors, or private equity firms
- Employee participation: Handover to the workforce—e.g., as a cooperative or through participation models
- Fusion / Merger: Merger with a complementary company
The succession process
Successful succession requires 3–5 years of lead time:
- Strategic preparation (3–5 years before): Analyze the business model, make the company “succession-ready,” and reduce dependencies on the owner
- Search for a successor: Internal or external? Define the requirement profile, identify and vet candidates
- Business valuation: Objective valuation as a basis for negotiation—earnings value, asset value, multiplier methods
- Induction and handover: Gradual transfer of responsibility, knowledge transfer, and handing over customer and partner relationships
- Legal and tax structuring: Articles of association, tax optimization, financing structure
- Post-merger phase: Change management for the team, communicate the new strategy, and create stability
Succession as an opportunity for innovation
Business succession offers a unique opportunity for strategic renewal:
- Business model innovation: The successor can challenge and further develop the existing model—with a fresh perspective and new ideas
- Digitalization: The successor generation often brings digital competence—an opportunity for an increased digital maturity level
- Repositioning: New leadership can position the brand in a contemporary way and tap into new target groups
- New business areas: Venture building and open innovation as growth strategies
- Sustainability: Successors often integrate sustainability strategies that make the company more future-proof
The combination of existing substance (customers, know-how, brand) and new innovative power is the greatest asset of succession.
Business valuation and financing
Central aspects of financial succession planning:
- Valuation methods: Capitalized earnings method, discounted cash flow (DCF), multiplier method—often several methods are combined
- Value drivers: Customer relationships, brand strength, recurring revenue, employee know-how, USP
- Financing sources: Equity, bank financing, seller loans, venture capital, subsidies
- Earn-out models: Part of the purchase price is paid based on performance—reduces risk for both sides
A solid business model with a clear value chain and a good pricing strategy significantly increases the company value.
Succession in Austria: Figures and support
- WKO Succession Exchange: The largest platform for business transfers in Austria—anonymous advertisements for transferors and successors
- Subsidies: AWS succession funding, young entrepreneur funding, founding privilege for new company formations within the framework of succession
- Consulting services: WKO Start-up Service, tax advisors specializing in succession, specialized M&A advisors
- Tax aspects: Real estate transfer tax, capital duty, and income tax optimization during the handover
Typical mistakes in succession
- Starting too late: Succession needs 3–5 years of lead time—many only start when it becomes urgent
- Emotional blockage: “Letting go” is difficult for founders and owners—professional support helps
- No clear business model: If the company depends too heavily on the owner, it is hardly transferable
- Unrealistic price expectations: Emotional value and market value often diverge
- Family over competence: Intra-family succession only if the person is also professionally and personally suitable
- Forgetting the team: Employees need transparency and involvement—uncertainty leads to fluctuation
We support transferors and successors in strategic development—for a succession that creates value.
Frequently asked questions about business succession
When should I start succession planning?
At least 3–5 years before the planned handover. The earlier you start, the more options you have: finding and training a successor, strengthening the business model, utilizing tax optimizations, and increasing the company value.
How much does a business succession cost?
Costs include: business valuation (€3,000–€15,000), legal and tax advice (€5,000–€30,000), optional M&A advisor (success fee 3–5% of the purchase price). In addition, there may be investments in the company’s transferability. Subsidies can cover part of the consulting costs.
What makes a company “succession-ready”?
Succession readiness means: the company functions independently of the current owner. This requires: documented processes, an independently acting management team, diversified customer relationships, a clear business model, and strong brand positioning.
How do I find the right successor?
First, define a requirement profile: professional competence, leadership experience, entrepreneurial thinking, and cultural fit. Search simultaneously internally (executives, employees) and externally (succession exchanges, M&A advisors, industry networks). Plan for an induction phase of at least 12–24 months.