Lucas Van Tongelen, business development manager at SDM
Many entrepreneurs start thinking about their own succession too late, making their company dangerously dependent on one person. However, there are also many ambitious entrepreneurs eager to take over solid companies and make them future-proof. SDM is not only a matchmaker between those two groups of acquirers. With the Smart2GO formula, SDM supervises the entire process, explains business development manager Lucas Van Tongelen. From the search for an acquisition to the contracts and financing of the deal. “By bringing expertise, enthusiasm and ambition on board, you reduce the risk that your company will suddenly be worth less than you had always thought.”
“I talk to entrepreneurs all day long,” Van Tongelen begins. “It is a general problem that too many entrepreneurs start thinking about succession too late. They keep working until they really can’t or really don’t want to anymore, and they start looking for a buyer for their company.”
It is a common problem that too many entrepreneurs start thinking about succession too late
“They go from 0 to 100 percent in one go. Or vice versa, depending on how you look at it. We help them to think about that succession earlier. You can perfectly strengthen your shareholding without having to give up control of your company.”
“The first question I always ask those entrepreneurs is whether they see people with enthusiasm and ambition in their company. They are often surprised by that question. Especially in smaller SMEs, the business managers have never really considered this. Nevertheless, it is an excellent way to strengthen the engagement of your people and to embed talent in your company.”
“Even without thinking about selling your company in the short term, it is a good idea to include your own people in the shareholding of your company. We also do that here at SDM, it is good for involvement and continuity.”
“Whether you see internally suitable candidates or not, there are always a lot of great entrepreneurs who are looking for companies to take over. However, the two groups do not always find each other. That is where we come into the picture with our Smart2GO formula: we build bridges between entrepreneurs who are thinking about succession and entrepreneurs who are interested in taking over a company. But the Smart2GO goes further than just that matchmaking: we guide and support that entire processfrom the search to the contracts and financing.”
Dare to jump
Smart2GO arose from the demand of entrepreneurs who approach SDM because they want to take over a company, says Van Tongelen. “That is a very diverse audience. These are buyers who have founded and sold companies before, but also people who have always worked as managers and now want to be at the helm themselves.”
“Some are looking without obligation, others scan the market very specifically. Such a takeover often takes place via a management buy-in: entrepreneurs buy themselves in and then gradually take over the majority of the shares.”
Entrepreneurs often encounter financial barriers during their acquisition search, explains Van Tongelen. “If an opportunity arises, you have to call in lawyers, accountants, tax specialists, … to investigate which meat you have in the tub. Then you quickly lose 10,000 to 15,000 euros.”
“Many entrepreneurs have lost that amount a few times, because it is usually not hit at the first opportunity. You can therefore no longer spend all that money on the actual management buy-in or the actual takeover. In addition, as an individual entrepreneur you often have to compete with parties that are professionally involved in these processes.”
“That is why we remove that financial barrier with our Smart2GO. In exchange for exclusivity, we take on all practical and financial expertise. We solve the complete puzzle: search for companies, valuation, review strategic options, due diligence, legal documentation, negotiations, … We apply the ‘no cure, no pay’ principlewhich is rather exceptional in our world.”
If we don’t find a suitable company for them, they won’t lose any money either. But of course we do expect them to seize an excellent opportunity when it comes along
“The entrepreneurs are committed to taking concrete steps towards a takeover within one year. If we don’t find a suitable company for them, they won’t lose any money either. But of course we do expect them to seize an excellent opportunity when it comes along. It is not always easy to take the step towards the final takeover. But SDM ensures that an entrepreneur can make that leap with a strong foundation. A deal can sometimes become difficult towards the end, when details and preconditions are discussed. SDM has enormous experience in this area and can give the entrepreneur the right advice. But he must dare to take the leap himself.”
Entrepreneurial blood
Investigating whether entrepreneurial blood flows through the veins of the prospective buyers is therefore step one of every Smart2GO, explains Van Tongelen. “We always start with a full assessment day. Together with experts, we examine what kind of cloth the entrepreneurs are made of. Are they entrepreneurs? Or rather managers? Then we know in which structure and which formula they will work best.”
“Once we have a reliable picture of who the entrepreneurs are, we will enter the market. We look within our broad network for entrepreneurs who are looking at succession, we set up a search tailored to the candidate to actively approach companies that are not yet in our network. In addition, the Smart2Go candidate himself also activates his network to get all possible deals from the market.”
An important asset of the Smart2GO formula, according to Van Tongelen, is the financing. “At SDM we have a whole network of entrepreneurs who invest in each other’s companies through so-called Smart Deals. We can also activate that network with a Smart2GO. By bringing other investors on board, the acquirers can play above their financial weight. Their own resources are often limited, a Smart Deal allows them to fish in a much larger pool of interesting companies.”
Not a one (wo)man show
Every acquisition involves a transition, says Van Tongelen. “Sometimes it is short, usually it lasts longer, even a few years. Then the takeover will take place gradually and the entrepreneur will prepare his successor himself to run the company.”
“That’s something we carefully examine during those extensive assessments: if entrepreneurs really don’t have patience, such a longer transition is a recipe for frustration. But we believe there is added value when acquirers are given the time to get to know a new company, and often a new market, thoroughly before taking the lead alone.”
“That is also an advantage for the entrepreneur who passes on his company. It is dangerous when an entrepreneur becomes too dependent on one person. Especially today, because everything is changing faster than ever before, making it difficult to keep up with all the evolutions.”
“By bringing fresh blood on board, enterprising people as shareholder and future owner as well skin in the game you can avoid your company becoming a one (wo)man show. Expertise, enthusiasm and ambition are added. This way you reduce the risk that your company is suddenly worth less at the end of the day than you always thought.”
