Transferring a business: ‘Start while you’re still fit and able’
Transferring a business is an intricate and multi-faceted process, particularly when a family-owned business is concerned. A wide range of fiscal, financial and legal matters have to be considered. But it is equally important to remember that the process also evokes a host of emotions. This is why a business transfer can often take several years to complete.
Koos van Haaster (aged 57) was until recently owner of De Bosrand garden centre. He built the business from the ground up: today it is a flourishing company with two nurseries, two wholesalers, four garden centres and 175 employees. He transferred ownership of the business to his six children a year ago. But the process of transferring ownership did not take place overnight. Koos first discussed the matter with his children on several occasions. The family also obtained information from specialists and people who could speak from experience about the ins and outs of transferring a family-owned business. Only once they had gained a clear picture of how all the different aspects were going to be arranged, could they begin to put the plans into practice. Altogether the process took around four years.
Adviser at the kitchen table
Dennis Werkman, Director of Mid Corporates at Rabobank Regio Den Haag, has known the Van Haaster family for over a decade. He guided the process of transferring ownership of the business. ‘Advisers from another organisation provided the tax advice and were consequently responsible for what I call the “hard side” of the transaction, in other words the technical aspects. I looked after the “side soft”, which means I focussed on the human aspects of the transaction. And I wasn’t afraid to ask critical questions. For example, I once asked Koos: Those six owners are all going to have their own ideas, how will you feel about that and how will you handle it? So from time to time I held up a mirror to the family and served as a confidant. I literally sat down with them at the table – the kitchen table to be precise.’
‘I wasn’t afraid to ask critical questions. For example, I once asked Koos: Those six owners are all going to have their own ideas, how will you feel about that? How will you handle it?’
Take care of it on time
Van Haaster began thinking about transferring ownership of the business a couple of years ago. ‘My children told me they were interested. I thought: I’ll have to do it one day, why not now? I’m still fit and active, so I can give them a helping hand. You are, after all, handing a huge responsibility to your children and large amounts and important decisions are involved. They don’t have any experience with that yet, so they need a bit of guidance and support. And the best time to give them that is while you’re still working in the company.’ Van Haaster advises other business owners to do the same: ‘Arrange the transfer on time, while you’re still fit and able.’
Rabobank as mediator
Werkman agrees wholeheartedly. ‘A transfer is a complex process. There are lots of things that everyone involved has to take into consideration. The first question is: How are you going to transfer ownership in a fiscally favourable way? And if the transaction frees up capital, you need to look into what you are going to do with it. Our colleagues at Private Banking can provide advice in that regard. The next question is: Are you also going to transfer control? It’s important to think carefully about the possibilities and to discuss them with each other. As an adviser, you’ve often known a company for years, so you’re personally acquainted with the people who run the business. As a result, you can play a mediating role with respect to a process such as a business transfer. Rabobank is uniquely suited to this role.’
Van Haaster ultimately decided to transfer the shares in the company, but not control of the company. ‘My children are aged 22 till 32, so they’re still young and relatively inexperienced,’ Haaster explains. ‘Some of our employees have been with us since my children were born. That makes it difficult for my children to be suddenly put in charge. We consult about everything, but I’ve got the final say.’ Van Haaster looks back with satisfaction on the business transfer. ‘I don’t regret it one bit. We all want to work together to make this company a continued success and everything is going very well. It is a bit tiring though because there is a lot going on. Six new owners automatically means six new ideas. And all six of those owners are equally impatient.’