Entrepreneurs: 3 tips for selling or transferring your company in Switzerland

35,000. That's how many family-owned businesses will be sold to someone outside the family in Switzerland over the next five years. This number includes nearly 2,000 small or medium-sized businesses in the French-speaking part of the country. Behind these statistics, the reality is inevitably varied and every business owner has their own story to tell.

Nevertheless, there is a consistent thread running through our experience of supporting sale, acquisition and valuation processes for Swiss companies over the past 15 years. Entrepreneurs can often underestimate the complexities of business succession. It is something that most have never done before and may never do again.

Our suggestions are not meant to cause concern. Rather, the message we want to convey is that it would be a shame to successfully build up a business, sometimes over a whole lifetime, and then fail to optimise the succession arrangements.

Here are three things to think about to maximise your chances of success when selling or passing on a business in Switzerland.

1. Think about succession well ahead of time

The first key to getting succession right is planning ahead. It is important to draw a distinction between "wanting" to transfer your business and "being ready" to do so. Effective preparation can have a considerable impact on the conditions in which a business is passed on.

There are three distinct aspects to this preparatory phase.

Prepare yourself personally

Entrepreneurs need to be very clear about their reasons for selling or transferring their business. What is your plan? Keep working, scale back or step back entirely? What are the motivations that lie behind your choice?

The answers will provide valuable insights into the steps that you as the business owner should take and potentially how the transition should unfold. This period generally lasts between six months and a year.

We advise against lengthy transition periods. This can be a tricky time, particularly for the former owner, who now has an unfamiliar and potentially uncomfortable role: dealing every day with the new owner and their team.

Anticipate issues for your family

Selling or transferring a business often involves formalising the implications for the transferring owner's family beforehand. This applies not only to questions of lifetime gifts and inheritance, but also to preserving governance structures in the event of a transfer within the family.

Let's look at an example of a father of two who wanted to transfer his company to his daughter. His son had no interest in taking over or getting involved with the family business. Despite this harmonious understanding, we made them all aware of the importance of drawing up an effective contract. This is because if the father had died suddenly, the son would have found himself in possession of half the company, a situation which no one – including himself – wanted.

Structuring your business

This final phase of preparation is all about the actual object of the transfer: the business itself. A company that is readying itself for sale needs robust processes and a clear organisational structure. If these are not in place, that should be remedied, much like putting your house in order before entertaining guests.

Are the contracts with employees, customers and suppliers properly drafted? Is there a second or third in command capable of stepping up to run the business? Does the company rely on certain key individuals? These are just a few examples of areas where time and attention are needed to maintain the image of the business.

The aim is to have an attractive, coherent story to tell future buyers. It is generally at this stage that professional advice can add significant value in optimising the conditions for succession. This is the subject of our second recommendation.