Challenges for family-owned enterprises

A recently published study has identified the following issues as key challenges for family businesses:

1.            Financing

To secure its independence family business strive for a high equity ratio, which is also very importan in the rating by the bank. 

2.            Alternation of generations

The responsible management of a family business should remain in the family, but sometimes  the next generation is not suitable for this task or not interested in the adoption, so that quite early an external manager must be found and integrated.

3.            Internal conflicts

Different views on management and development of the company between managing directors, advisory board and family develop a dangerous momentum of its own when mixed with family affairs and there is no provision for a de-escalation of possible conflicts.

Owners of family businesses that find themselves confronted with one or more of these problems or expect to be in the future, should take our support in dealing with these challenges.  

 

Rating Preview

Companies should consider BEFORE applying for a bank loan, which score they probably would get in a rating process, which all the banks perform in individual non-standard procedures. We recommend that you join us for a "trial run for the rating " to get an initial idea of the bank’s judgement the company could expect.

We show you what past and future related data / information about assets, liabilities, income and financial position will be used in the rating process (hard facts) and what additional information and estimates (soft facts) will be added. With the specific business data, we simulate the rating and prepare the company for the expected credit decision. The rating results from the overall constellation of all relevant factors that are weighted differently, and is summarized in a striking characteristic as a credit assessment of the company. From this result it depends essentially, if the bank grants the requested credit and - in the positive case - on what terms.

We offer our support to entrepreneurs not only in the preparation of the loan talks with the banks but also in the negotiations. With the rating preview, we also show how improvements of individual factors affect the rating, so that you will get the benefits of learning and training effects in any case.

 

Financial situation of German companies

Recently, the KfW banking group published the results of a study about the financing situation of German companies. According to KfW, the financial conditions have deteriorated significantly, because compared to last year the demands of the investors have increased significantly. In particular, smaller companies complain their growing difficulties in lending, particularly if they belong to the retail and service sector. The main difficulties are the increased documentation requirements and the wider disclosure of information as well as the higher needs of securities.

If you as the owner of a small or medium-sized company want to take our support in improving your financial situation, please contact us for an informal initial meeting, which of course will be free of charge.

 

Unresolved Succession in SMEs

A survey by Deutsche Bank AG to succession – issued in the fall of 2008 - showed a truly alarming result: one third of medium-sized German companies have generally not made a succession plan, although this problem urgently has to be resolved within the next five years by approx. 20 percent of companies surveyed and by additional 25 percent within the next five to ten years.

 

Alarming Lack of Precaution

Seeing the necessary lead time until the real transfer of full responsibility to an appropriate successor (the whole process can easily take three to five years), every entrepreneur of a SME should be worried by the lack of preparedness. The survey results are incomprehensible, because the need for succession planning is seen by two third of the surveyed entrepreneurs who have to be prepared as early as possible in order to ensure the company's continuance. In addition, the respondents accept the experiences that clear succession planning

• increases the certainty for long-term decisions,
• ensures the continuity of the corporate culture and
• creates the basis for long-term financing strategy of the company.

Unfortunately, observations are missing for the contradictory behavior.

Our support

If you as the leader of a midsize company really want that nobody will complain you now or later not to have taken care of an early succession or to have neglected this urgent problem totally, we as the Spitz Corporate Finance GmbH offer our assistance: initially we will help in the process of developing a plan of measures with respect to your personal goals and family situation. By working closely with the Spitz tax advisors you can get a comprehensive consulting service. As competent and trustworthy partners, we support you in the successful implementation of your planning - in order to transfer goals into success.