Business succession
Four ways out of the business you built. What each one does to your money, and what each one does to the people who work there.
One day you will stop running this. Succession is the word advisors use for that. What it means in practice is deciding who takes over the thing you built, and choosing that moment yourself rather than having it chosen for you.
There are four routes. You hand it to family. You sell it to the people who already run it. You sell it to an outside buyer. Or you close it deliberately, while it is still solvent and while you are still the one choosing.
Each pays a different amount, at a different speed, and leaves your staff in a different position. None of them is obviously right. The common mistake is not picking the wrong route. It is waiting long enough that the choice gets made for you.
Why this lands in your sixties
Most owners do not wake up one morning wanting to sell. Something else happens first. A health scare. A business partner who retires. A year in which the work simply stopped being interesting. A large customer leaves and you realise you do not want to spend the next two years replacing them.
The pattern is that the decision gets postponed until an event forces it, and an event forces it at the worst possible moment. A business sold in a hurry, by an owner who has to go, sells for less. Buyers can tell, and there is no way to hide it, because the timetable itself gives it away.
There is a second reason to start early and it is less comfortable. A business that depends entirely on you is worth less to everybody else than it is to you. If you are the main salesperson, the technical authority and the person the important customers ring, then what a buyer is actually purchasing is a job that requires your particular skills. Every year you spend making yourself less necessary widens the list of people who can buy it, and raises what they will pay.
The four routes, honestly
- Pass it to family. Keeps the name and usually keeps the staff. Almost always pays you less than an outside buyer would, and often pays it over a long period. Works when a family member genuinely wants it and is capable of it. Fails badly when either of those is assumed rather than tested.
- Sell to your management. The people who already run it buy it from you. The culture survives, the staff stay, and the handover is calm. Money is the constraint. Managers rarely have cash, so the price is usually lower and much of it arrives later, paid out of the profits of a business you no longer control.
- Sell to an outside buyer. Usually the highest price and the cleanest break. Most of the money arrives at or near completion. You also have the least say in what happens afterwards, including to the people who work there.
- Wind it down deliberately. You close while solvent, pay everybody what they are owed, sell the assets and keep what is left. It sounds like failure and often is not. For a business whose value is mostly its owner, a planned closure can leave you with more money and far less risk than a sale that was never going to happen.
The fourth route has a guide of its own, because it is the one almost nobody writes about honestly. Closing your business down
Passing it to family
This is the route most owners want, and the one that most often goes wrong, because it gets decided emotionally and then executed as a transaction.
Three questions settle it. They need to be asked out loud, separately, and before you have formed a view that the other person can sense.
Ask these before anything else
- Does the person actually want it? Not whether they would accept it. Whether they want it. Those are different answers and only one of them survives a bad year.
- Can they do the part you do? Not the part that is written down. The judgement, the pricing, the difficult customer, the decision at four o'clock on a Friday.
- What happens to the children who are not taking it over? If the business is most of your estate, then leaving it to one child is leaving most of your money to one child.
On money, be clear with yourself. A family transfer usually happens below market value, and is often funded out of the future profits of the business itself. That is a legitimate choice. It is also, in part, a gift. Naming it as one makes it far easier to discuss with the rest of the family than presenting a sale that everybody can see was not really a sale.
Get tax advice specific to your own country before you commit to a structure. Several European countries offer some form of relief on the transfer of business assets, but whether one exists where you are, and what it requires, is a question only a local advisor can answer. Where relief does exist, the conditions are usually strict and often include minimum holding periods measured in years, which means a deadline may already be behind you. This is not a subject for general guidance, including ours.
Selling to your management
A management buyout protects what you built. The people buying already know the customers, the staff and the weaknesses. There is no discovery process in which a stranger finds something that frightens them, because nothing in the business is going to surprise them.
The constraint is always funding. A management team that has drawn a salary for fifteen years does not have several million euros. So the price gets assembled out of some combination of four things.
- Bank debt. Secured against the assets and cash flow of the business itself. The cheapest money available, and the least available if your profits move around from year to year.
- Their own cash. Usually the smallest piece and always the most painful for them. It matters more than its size, because a buyer with nothing of their own at risk behaves differently when a bad quarter arrives.
- A vendor loan. You lend them part of the purchase price and they repay you out of future profits. Understand what this makes you. You are now a creditor of a company you no longer control, ranking behind the bank.
- An earn out. Part of the price depends on how the business performs after you have gone. If it underperforms, you are paid less, for reasons you can no longer do anything about.
Selling to an outside buyer
Outside buyers come in two kinds, and they behave differently enough that it is worth knowing which one is sitting across the table.
| A trade buyer | An investment fund |
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| Who they are | Another company in your industry. Often a competitor, sometimes a customer or a supplier. | A private equity firm buying a controlling stake, usually intending to sell again in about five years. |
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| Why they want it | Your customers, your capacity or your people. Occasionally, to stop somebody else having them. | Your cash flow, and a plan to make it larger. |
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| What happens to your staff | Overlapping roles are exposed. They already have a finance team and a managing director. | Usually retained, because the fund has nobody of its own to put in their place. |
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| What they paid, median | 7.8 times EBITDA | 10.0 times EBITDA |
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| What they want from you | A handover, commonly six to twelve months. | Often that you stay on, and sometimes that you reinvest part of your proceeds alongside them. |
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The Argos Mid-Market Index is a quarterly index published by Argos Wityu, a European private equity firm, with Epsilon Research. It tracks what buyers actually paid for mid sized European businesses.
In Q1 2026, the overall median was 8.6×. Trade buyers paid a median of 7.8×, while investment funds paid a median of 10.0×.
Scope: eurozone UNLISTED companies, equity value €15M to €500M, majority-stake acquisitions, six-month rolling median.
EXPLICIT EXCLUSIONS: financial services, real estate, and high-tech / technology sectors are not included in the Argos Index universe.
Read the source from Argos Wityu / Epsilon Research
The gap between 7.8 and 10.0 is the most useful fact in that index, and a blended average hides it completely. It does not mean funds are more generous. It means they are buying a different thing. A fund is buying a business that can run without its owner and keep producing cash. If yours cannot yet do that, the fund multiple is not available to you at any price, and no amount of negotiation will make it available.
Read the scope above before you apply either figure to your own business. The index covers companies with an equity value between fifteen and five hundred million euros. Most owners reading this are below that range. Our view, and we are stating it as a view rather than as a published finding, is that smaller businesses generally trade lower, because customer concentration and dependence on the owner are usually greater, and those two things are precisely what the multiple is pricing.
What each route does to the people who work for you
Owners raise this late in the conversation and think about it early in private. It deserves a direct answer rather than reassurance.
In a family transfer and in a management buyout, almost nobody loses their job. The buyer has no duplicate functions and no reason to change anything on day one.
In a sale to a trade buyer, the roles at risk are the ones the buyer already has. Finance, human resources, sometimes sales management. Production and technical staff are usually the reason the buyer is there in the first place, so they tend to be the safest people in the building.
In a sale to a fund, the staff generally stay, because the fund cannot run the business without them. What changes is scrutiny. There will be monthly reporting, a board, and a level of attention your team has not had before. Some people thrive on that and some leave because of it.
In a planned wind down, everybody leaves, on notice, with what they are legally owed. It is the hardest of the four to tell people about, and the only one where you control the timing entirely.
You can put obligations on a buyer in the sale contract. Retention of staff for a period, or specific protections for named individuals. Be realistic about them. They are difficult to enforce once the money has moved, and a buyer who has to be compelled to keep your people will find a lawful route to removing them later. The stronger protection is choosing the buyer carefully, not drafting the clause carefully.
What each route does to your money
Illustrative, using a business with €600,000 of adjusted profit. The multiples are the published eurozone medians for mid sized companies, which are larger than this example, so read them as the shape of the answer rather than as your answer.
The same business, four routes| Sale to a trade buyer at 7.8 times | €4,680,000 | Most of it payable at completion. |
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| Sale to an investment fund at 10.0 times | €6,000,000 | Often with part deferred, and sometimes with you reinvesting alongside them. |
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| Management buyout | Lower, and mostly deferred | We are not going to invent a multiple here. It depends entirely on what your managers can raise, and that is a question about your bank rather than about your business. |
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| Family transfer | Usually a gift in part | Priced by agreement and by tax planning, not by the market. |
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| Planned wind down | Net assets after costs | Has nothing at all to do with profit multiples. |
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Adjusted profit is not the profit shown in your accounts. Adjusting it properly is the largest single lever most owners have, and most owners have never done it.
If the phrase adjusted profit is doing a lot of unexplained work in that table, this is the guide that explains it, with the arithmetic written out. EBITDA and normalisation
What to do in the next twelve months
None of this commits you to selling
- Find out what it is worth now. Not in order to decide anything. In order to know which of the four routes are actually open to you.
- Write down what you want the money for. A number with a purpose behind it is far easier to negotiate around than a number you chose because it sounded about right.
- Make yourself less necessary. Name a person for each thing only you currently do, and begin moving it across. This raises the price and widens the buyer list at the same time, which very few actions do.
- Have the family conversation. Separately, with each person, before you have formed a view.
- Get three years of clean accounts together. Buyers discount what they cannot verify, and so do the banks lending to your managers.
- Ask a tax advisor in your own country what the reliefs require. Several have holding periods measured in years.
Start with the number
All four routes depend on the same missing fact. What is it worth, and to whom? Until you know that, you are choosing between options without knowing which of them are real.
Our valuation is free and takes about ten minutes. It returns a range, the reasoning underneath it, and the benchmark it is calibrated against, so you can see what a buyer would be looking at rather than a number with no working shown.
Step one of three: see your number, free, with no account and no name.
See what it's worth