Business Succession: Taking Over a Business Instead of Starting One

Taking on a business succession means acquiring an existing business rather than founding a new one. The advantage: a customer base, employees, suppliers and a running business are already there. The task is a different one from a start-up — it is about checking, valuing and financing, not building from scratch.

This article is aimed at successors: how to find a business, what to check before the takeover, how to solve the financing and which routes of succession exist. The perspective of the person handing over is covered in “Business Handover”.

Why a takeover rather than a start-up?

A takeover acquires a working business with revenue, customers and a team — instead of starting from zero. That lowers the risk and considerably shortens the path to profitability. The need is large: for 2025 to 2034, according to BMWET and KMU Forschung Austria, some 52,500 businesses in Austria are due for handover, with around 705,000 jobs attached.

The downside: you pay for the existing value and take on the history of the business. All the more important is the examination before the takeover.

How do I find a business to take over?

You find businesses to take over through three channels: your own network and industry, public succession exchanges such as the WKO succession exchange, and M&A advisers who bring sellers and successors together discreetly. The network is the most confidential, the exchange the broadest, the adviser the most targeted.

How the search works from the seller’s perspective and the role of discretion is shown in “Finding a Successor”.

What must I check before the takeover?

Before the takeover you examine the business like a buyer: earnings power, dependence on the previous owner, the condition of assets and contracts, customer loyalty and open risks. The more a business depends on the person of the seller, the more carefully you should design the price and the transition phase. A realistic valuation is the basis of every negotiation.

How to assess the value of a business soundly is set out in “What Is My Company Worth?” — the methods apply to successors just as to sellers.

How do I finance a business takeover?

Financing usually combines several building blocks: equity, a bank loan and often a vendor loan, in which the seller defers part of the purchase price. Especially when the existing management takes over, financing is the critical point — the purchase price usually exceeds the available capital.

How a management takeover is financed is shown in “Financing a Management Buy-out”; the role of the deferred purchase price is explained in “Vendor Loan”.

Which routes of business succession exist?

Four basic routes: the family-internal takeover, the takeover by your own management (management buy-out), the entry of an external manager (management buy-in) and the purchase by another company. As a successor, MBO and MBI are especially relevant to you — depending on whether you already know the business or come from outside.

The two management routes are compared in “MBO vs. MBI”; the overview of all options is given in “Succession Options” and the succession overview.

The most common mistake — and how guidance helps

The most common mistake is to take over a business out of enthusiasm without examining it soberly — and without securing the financing in advance. Those who do not know the value pay too much or fail on the financing. An independent adviser brings a realistic valuation, structures the negotiation and helps put the financing on a sound footing.

If you are thinking about succession, sale or finding an investor: talk confidentially with IGCP Capital Partners — independent and discreet. → igcp.at

Frequently asked questions

What does business succession mean?

Business succession describes the takeover of an existing business by a successor — from the family, from management or from outside. From the successor’s perspective it means taking over a working business with customers, employees and revenue, rather than founding a new one.

Is taking over a business better than starting one?

A takeover brings revenue, customers and an established team from the start — that lowers the risk and shortens the path to profitability. In return you pay for the existing value and take on the history of the business. Whether it is worthwhile is decided by the examination before the takeover.

How do I finance the takeover of a business?

Usually through a combination of equity, a bank loan and often a vendor loan, in which the seller defers part of the purchase price. The purchase price usually exceeds the available capital, which is why financing should be planned early and realistically.

Where do I find a business to take over?

Through your own network and industry, through public succession exchanges such as the WKO’s and through M&A advisers who bring sellers and successors together discreetly. The network is the most confidential, the exchange the broadest, the adviser the most targeted.