Transeo E-newsletter # 1

IN THIS ISSUE


FOREWORD

Transeo, achievements and future prospects…
by Jean-Pierre Di Bartolomeo, Chairman, Transeo AISBL

2009 and 2010 have been exciting years for Transeo: over the past two years, we have been working hard to create the first association for SME transfer at European level. Transeo AISBL was set up in December 2010 and since then, 33 members from 12 countries have already joined! The transfer market in Europe needs professionals with the best expertise: that is why Transeo works to identify best practices in the European countries: in this way, you will have access to best practices (tools, programmes ...) and will have the opportunity to apply them in your respective countries. You can develop your expertise and provide optimal support and advice to SMEs... Transeo is also a way for you to meet other members from other countries, to develop your network and have the possibility to establish qualitative collaborations with other members.

Three things to know about Transeo's actions in 2011

From the input we received during brainstorming sessions of previous events (the henceforth renowned “European Café”) and the many ideas we had, the 2011 action plan was devised. Here are three things you ought to know about it: first, we will work together within the first “Mapping working group”: the objective is to gather information about the national SME transfer environments (decision-makers, major players, working of the market, policies, statistics about SMEs and SME transfers, ...). Such information will be analyzed, then presented and discussed during the meeting of the Mapping working group in October in Brussels. Secondly, more actions will be taken in 2012, including working groups to study and discuss key issues. Third, Transeo positions itself in Europe as the privileged representative of the SME transfer experts and therefore, writes position papers on which we ask your input to make your voice heard to EU decision-makers (the first one is dedicated to business transfer in the SBA Review).

What to expect from the Transeo E-newsletter...

By publishing an E-newsletter, Transeo aims at communicating in a simple, modern and regular way. We want to give you valuable, interesting information and highlight your achievements and projects in SME transfer. In each edition of the Transeo E-newsletter, you will find a technical article, the interview of an expert, Transeo news and coming events at European scale. Enjoy your reading!


TECHNICAL ARTICLE

SBA, SBA Review and SME Transfer in Europe

Transeo analyzed the Small Business Act (SBA) and its review (SBA Review) to explain you in a clear and simple way the European Commission's position and recommendations regarding the transfer of SMEs. And tell you what kinds of actions Transeo proposes to take to face the challenges pointed out by the Commission, both at the level of the Member States as well as at European level.

The SBA and the SBA Review in a nutshell

Adopted in 2008, the SBA reflects the European Commission's political will to recognize the central role of SMEs in the European economy. It also puts into place a comprehensive SME policy framework for the EU and its Member States. The SBA applies to all companies that are independent and have fewer than 250 employees, namely 99% of European businesses. In February 2011, the European Commission took stock of its own achievements, as well as the progress made by the Member States by issuing the SBA Review, an overview of progress made in the first two years of the SBA. In this review, the EC set out new actions to respond to challenges resulting from the economic crisis, and proposes ways to improve the uptake and implementation of the SBA.

And how about SME transfer?

In the SBA, SME transfer is being tackled under Principle 1: “The EU and Member States should create an environment within which entrepreneurs and family businesses can thrive and entrepreneurship is rewarded.” In the SBA Review, SME transfer is being dealt with under action “3.4. Promoting entrepreneurship, job creation and inclusive growth”.

In those documents, there is a distinction between the actions taken by the European authorities, and actions that ought to be taken by Member States. As for the EC's actions, the EC says in the Review that it is going to take actions to identify best practices to support business transfers and launch a campaign to promote these practices. And in the SBA and the review of the SBA, the European Commission invites the Member States to take specific actions in order to put its recommendations into practice.

In SBA:

  • Ensure that taxation (in particular gift tax, taxation of dividends and wealth tax) does not unduly hamper the transfer of businesses.
  • Put in place schemes for matching transferable businesses with potential new owners.
  • Provide mentoring and support for business transfers.

In SBA REVIEW:

  • Develop user-friendly and widely supported marketplaces and databases for transferrable 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.

Transeo's position

Transeo welcomes the approach of the European Commission regarding SME transfer and expresses its full agreement with its views.

Transeo shares the opinion that further steps need to be taken to improve SME transfer environments in Member States and strongly recommends that field professional stakeholders join forces.

“Non transfer of firms for reasons other than economic may be estimated at 500.000 firms representing 2 million employees (i.e. jobs lost) across Europe. Improving the number of transfers may increase the number of firms leading thus to employment growth.” (Source: “Business Dynamics: Start-ups, Business Transfers and Bankruptcy” - Study commissioned by European Commission, DG Enterprise and Industry under framework contract N° ENTR/2007/040-2).

Yet, there are still many actions to be taken by Member States regarding SME transfer. As a matter of fact, due to specific national policies, specific market environments and different degrees of collaboration between authorities and private/public/academic experts from one EU country to another, there are huge gaps between European countries, some of them being more advanced than others in the implementation of support instruments in SME transfer.

The position of Transeo AISBL regarding SME transfer in Europe is that the transfer of European SMEs is crucial to the European economy and there are several priority areas that need to be tackled at EU level, but also at national level, by the Member States:

  • Business transfer deserves same political attention as business start-ups
  • Need to improve awareness-raising of potential sellers and buyers to avoid loss of businesses
  • Need to improve the SME transfer conditions to encourage entrepreneurs to sell or take over an SME
  • Need to identify and exchange SME transfer best practices between European countries
  • Ensure that European potential sellers and buyers can be advised in the transfer process by professional experts, which will also contribute to more successful transfers
  • Need to provide mentoring to entrepreneurs


Transeo's coming actions will be designed to face some of those priority issues.

Do not hesitate to contact us to have more details on the Transeo Position Paper!


INTERVIEW 1| Taking stock of business transfer in Hungary and Hungary strategy for business transfer at EU level | Interview of Hungarian Minister of State for National Economy Zoltán Cséfalvay

As Hungary holds the Presidency of the Council of the European Union till June 2011, Transeo interviewed Zoltán Cséfalvay, Minister of State for National Economy, about the situation of business transfer in Hungary and the possible initiatives Hungary is going to put into place regarding business transfer within the context of the Presidency of the EU.

Transeo - Minister CSEFALVAY, in the “Annual Report on the State of Small and Medium-sized Business in Hungary” (2008), the Ministry for National Economy is taking stock of SMEs development and challenges, including the termination rate of SMEs in Hungary. As you know, taking over an existing business is a good alternative to starting up a new one. As the European Commission underlines it, more and more businesses will have to be transferred in the coming years. Could you briefly explain the current Hungarian policy for business transfers (awareness-raising of ageing entrepreneurs, of potential buyers, support programmes, matching between potential sellers and buyers …)? And the future projects and collaborations to tackle business transfer?

Zoltán Cséfalvay: “I would like to thank you for your interest in the position of the Hungarian Presidency on the significant issue of business transfer. The Presidency is deeply committed to improving the situation of SMEs, as we believe that they are the main drivers for job creation. Supporting micro-, small- and medium-sized enterprises (SMEs) is of utmost importance to the Hungarian Government. This priority is reflected in our core economic policy programme (the “New Széchenyi Plan”) by measures aiming at the establishment of a stable business environment, the reduction of red tape, and the formation of business-friendly local governments. Ensuring fast and simple access to finance (especially to EU funds) for businesses is also essential. These main principles appear in 6 priorities of the New Széchenyi Plan, each containing several policy measures. The elaboration and the arrangement of these measures into a coherent programme is an enormous task in itself. Therefore, we are focusing on these measures in the first place, and there are no particular policy provisions on supporting business transfers at the moment. Nevertheless, it is worth mentioning, that linear inheritance between blood-relatives became tax-free as part of the new Government's tax cut programme. Accordingly, the inheritance of business shares between family members is tax-free, which eases the transfer of family businesses.”

Transeo - As Hungary has the Presidency of the Council of the European Union during the 1st semester of 2011, it defined priorities and a programme. The Presidency wishes to “improve the situation of SMEs, which are the drivers for job creation”. Within the context of this priority, do you have suggestions, ideas, or projects at European level in order to improve the survival of SMEs through their transfer to a new owner?

Zoltán Cséfalvay: “The Hungarian Presidency intends to reflect on the issue of SME transfers in the entrepreneurship chapter of the Council Conclusions on the Review of the "Small Business Act" where the Council should encourage the Member States to develop user-friendly and widely supported marketplaces and databases for transferrable businesses and 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. Furthermore, the self organization of the non-governmental sector is a basic value of the well functioning market economy, and I believe it is neither expected, nor appropriate that the member state or the European Community should solve the emerging new needs of the markets with new regulations or with funding new bureaucratic institutions. The Hungarian Presidency agrees with and supports the recommendations of the SBA proposing more extensive consultations with SMEs and their deeper involvement in policy formation.”

Transeo - Founded in 2010, Transeo is the European association for SME transfer. For the first time, experts in SME transfer from the private, public and academic sector, are gathered within an association at European level. The objective is to exchange best practices between experts, in the key areas of business transfer, to make the sector of SME transfer experts more visible and professional and improve service to SMEs in the EU countries. What is your opinion about Transeo?

Zoltán Cséfalvay: I believe, that European non-governmental organizations, and associations, like Transeo which represent the interests of SMEs, should be given more room, should be consulted with, and their opinion and experience should be incorporated during the elaboration of new actions. Therefore I warmly welcome the participation of Transeo on the Conference "Mobilising SMEs for the Future of Europe" in Gödöll.

Editor's note: Transeo is taking part in this Conference to present the association, and will tell its Members about the Conference's conclusions.


INTERVIEW 2 | Business Successor's School – Learn from the past, challenge the existing and create the future | Sakari Oikarinen, Transeo Member in Finland

The genesis of the Finnish Business Successor's School has arisen from two very profound facts. Firstly, according to the population pyramid, approximately 60 000 Finnish entrepreneurs are over 55 years old and in many cases any successors cannot be found from inside the family. Secondly, the students and their education at the universities of applied sciences are very entrepreneur-oriented and the opportunity of starting one's own business by buying an existing one was seen as a favorable option.

Background

In 2005, the Lahti University of Applied Sciences (Finland) decided to create a programme ”Business Successor's School” where existing businesses and students in the universities of applied sciences would be linked together in order to execute the business transfer during the training process. The benefits of such a programme were seen to lie in two main issues. Whilst the students are not so experienced in running a business, the era of joined leadership with the incumbent or seller helps students to grasp the tacit knowledge. On the other hand sellers are often reluctant to give their business to just anybody – they are most willing to share their knowledge, because it is also an important part of the incumbent's or seller's psychological process of giving up the business. The key elements of the programme were: learn from the past – challenge the existing – create the future.

Working

The Successor's School programme is divided in several thematic work packages (“modules”). It starts with a qualification test. 30 students are selected by teachers and consultants out of hundreds of applicants, and are invited to answer questionnaires and take part in personal interviews. Then, each student gets a personal training programme, while the consultants and teachers start collect and analyze the firms to be sold and connect the sellers with the students, so the transition process starts right away. Then while students go through their theoretical part of training (business analysis, how to buy a business …), they are also working on a development plan with the seller for the firm to be bought. Consultants and teachers are mentoring both sellers and buyers all the way. After the transition, the University continues to mentor the former student.

Lessons learnt

Four pilot programmes were carried out in Finland. There are currently no exact results in terms of successful business transfers following the programme but it can be estimated that one third of students who were in the Business Suuccesor's School did buy the company or took over their family business. It is likely that the business transfer rate could be higher today because in 2005 the option of selling/buing a firm was not so familiar and it was quite hard to get "good companies for sale". Nowadays it is much easier to introduce the topic to sellers in Finland.

One important factor of the Successor's School is that the programme was part of the students' curricula, so it was rapidly implemented as a part of the studies in several universities of applied sciences. The structure of the programme in packages and the content of this one-year programme were created by Confidentum Ltd and CI Cityimage Ltd. These companies executed also four first programmes in four different universities of applied sciences. In these first four programmes, nearly one hundred students learned the business skills and business buying skills and one third of the students became entrepreneurs during the programme or shortly after.

In 2008, the Successor's School was recognized as a best practice by the European Commission Expert Group (Report “Entrepreneurship in higher education, especially within non-business studies”). Thanks to its structure in packages, and the flexibility in its execution, the Successor's School programme would be easily applied also in other countries.

For more information, please contact the Transeo staff!


TRANSEO NEWS

  • More members are joining Transeo!

    New members have joined! To this day, Transeo counts 33 members from 12 countries: Belgium, Canada, Denmark, Finland, France, Germany, Italy, Latvia, Luxembourg, Norway, Switzerland and The Netherlands. The Transeo staff, in close collaboration with the members, initiates and keeps contacts with potential members in Europe in order to expand the network of Transeo professionals and bring even more expertise in the association.

  • New section on Transeo website presenting all Transeo Members!

    The Transeo website now features a section entirely dedicated to its Members, with the possibility to look for Transeo members in specific countries and in specific sectors (advising, academic and matching platforms). Each Transeo Member also has his/her own Member Profile where activities are described and contact details mentioned.

  • “Mapping working group”: launch and meeting during 2011 European SME week

    In order to have a better knowledge of SME transfer stakeholders, authorities, best practices and data in the European countries, it is a priority for the sector, and for Transeo AISBL, to gather up-to-date and reliable information in this respect to make the market more transparent and even more professional. That is why Transeo launched in priority the “Mapping working group”. Members of the working group are collecting data regarding their country. Then, the Transeo staff will compile and analyze such data. The working group will meet during the 2011 European SME week (3rd to 9th October, 2011 in Brussels) to discuss collected data and take stock of the SME transfer environments in the countries studied within the working group (namely the countries represented by members of the group). The result will be a library that reflects the SME transfer market and environment in Europe. For more information about the Mapping working group, please contact the Transeo staff!


COMING EVENTS

  • 24-25th May, 2011 | Budapest, Hungary |“Mobilising SMEs for the future of Europe”

    On 24th and 25th May, the European Commission's DG Enterprise and Industry organized, together with the Hungarian EU Presidency, a high-level conference "Mobilising SMEs for the future of Europe - The Small Business Act for Europe & European Enterprise Awards 2011: exchange of good practices" in Gödöll, near Budapest, Hungary. The event focused on local and regional solutions to the key challenges facing SMEs and on implementing the Small Business Act (SBA) for Europe in the Member States. The event incorporated the European Enterprise Awards ceremony.

    Transeo attended this Conference, following its position paper on the SBA Review in order to highlight its propositions regarding SME transfer. All Transeo members have been invited and it was a good occasion to network with other Transeo members and to meet new SME transfer experts.

    For more information, visit the Conference website!

  • 18-20 August 2011|Hanseatic city Riga, Latvia |BALTIC VALUATION CONFERENCE 2011

    Alina Dudele, Transeo Member from Latvia, invites you to attend the Baltic Valuation Conference 2011, which will be taking place in Riga, Latvia, organized by the Latvian Association of Property Appraisers.

    Topics to be discussed include “Mutual recognition of valuers' qualification” and “Application of various valuation standards in cross-border valuations”.

    Programme & registration.

    For further details, feel free to contact our staff or Transeo Member Alina Dudele, alina@bkgriga.lv.

  • 6-7th October, 2011 (date to be confirmed)| Brussels, Belgium | Mapping Working Group Meeting

    During the 2011 European SME Week, Transeo members are invited to take part in the meeting of the Transeo Mapping Working Group, which will take place in Brussels. On this occasion, the conclusions of the Mapping Working Group will be presented and discussed. Members will also be asked about their expectations for the 2012 Transeo priority actions. For more information about the Mapping Working Group meeting, please contact us!


DID YOU KNOW THAT

  • Transeo AISBL gathers 33 members from 12 countries, including 3 universities, 24 advising firms and 6 matching platforms!
  • “It seems that the concept of business transfer becomes more homogeneous across the European countries: they face similar problems (i.e. high percentage of non-transferred businesses meaning job losses and decrease in economic activity that may not immediately represent opportunities for new businesses), they implement or think of implementing similar support instruments and this means that the virtuous benchmarking method initiated and developed by DG ENTR may give more positive results in the coming years. It is probably time to start with annual monitoring of business transfers in the Member States.” (Source: Study commissioned by DG Enterprise & Industry, “Business Dynamics: Start-ups, Business Transfers and Bankruptcy”, November 2010).