Change of ownership

The transferability of an enterprise and its operations should actually be part of business planning right from the start.

– It is a good idea to consider possible later changes of ownership starting as early as when thinking of a name for your business. All kinds of company types can change ownership: you can sell a limited company, and when it comes to other types of companies, you can sell the operations. This means that the company’s existing responsibilities and rights are not transferred automatically, says Aila Hemminki, who is the ownership change expert at Etelä-Pohjanmaan Yrittäjät.

Consider at least the following: 

What does the process of an ownership change look like in practice?

– It most often involves cleaning up the balance sheet and/or cash register and current stocks, sometimes changing the company form, or dividing up the business in a way where the other keeps the real assets and the other gets the business operations, says Aila.

– The very first thing to do, however, is deciding a lot of things: what to sell and to whom, how to look for a buyer, what is the schedule, will the seller stay on as a mentor or an employee, and how to define the company value, she says.

It is often worthwhile to seek outside counsel for the transfer. Ownership change counselling is free for all enterprises in the South Ostrobothnia region, because the operation is funded for example by municipalities. Counselling is also available at local business services. In addition to Aila, the staff at the Järvi-Pohjanmaa Yrityspalvelu will provide support and assistance in the Alajärvi, Lappajärvi, Soini, and Vimpeli region.

Who will continue the operation?

If you cannot find anyone among your family members to take up the business, you can start looking from among your staff, customers, partners, or competitors. You can also look for a buyer in a public search or through a business broker buyer register. However, not everyone wants to make their intention to sell public.

– It is very contradictory that in many cases the business network will lose trust in the enterprise being sold. After all, what the entrepreneur is doing is trying to ensure the continuity of the business by initiating ownership changes, for example due to their own retirement. It has actually been researched, that businesses often grow after changing ownership, meaning that they get a fresh start, Aila Hemminki remarks.

You should not have to be afraid of a change of ownership or try to hide it for no reason. The sale of an enterprise or business operations is nonetheless often an emotional affair. It is however not worthwhile to shut down a functional and profitable enterprise.