Corporate investment stake

As a company makes the transition to its new owner, many aspects of that transition must be taken into account. Besides the interests of the seller and those of the buyer, concerns on the part of employees, customers and suppliers also play an important role.

In many cases it is advisable to plan corporate transition step by step, that is, in the form of an investment stake. In that case, the entire company is not sold to a new owner but shares in the company are sold. An investment stake is frequently the prelude to complete takeover of the company later on.

The advantages of an investment stake for the seller:

  • He gets to know the buyer better in the course of day-to-day business and is better able to assess whether he is the appropriate candidate for carrying on the business.
  • He need not withdraw all at once but can continue to manage the company for a certain period of time.
  • Customer and supplier relationships can be taken over gradually.
  • The employees too will have an opportunity to get used to the new corporate situation.

The advantages of an investment stake for the buyer:

  • The capital required is for the time being less than what complete purchase of the company would cost.
  • The buyer can influence corporate management and has a right to profit sharing.
  • He can take his time to form an impression of the company and the business environment. Thus, with an investment stake, opportunities and risks can also be better assessed.
  • The buyer benefits from the skills and experience of the previous partner or owner.
  • He can familiarise himself with customer and supplier relationships in a gradual process.
  • He gets to know the employees and the company's customs.

Corporate stake or complete sale?

By contrast, sale altogether offers the seller the possibility of a quick transition. He can quickly have the purchase sum at his disposal and withdraw from running the business. The buyer gets complete control of the company. But even in this case, the transition should be designed as softly and smoothly as possible in the interests of employees, customers and suppliers and should be accompanied by corresponding measures.

The decision on the appropriate approach is always dependent on individual conditions and ideas on the part of the buyer and seller. Whichever approach you decide on, the team at Real Treuhand will accompany you throughout the entire transaction process, with strategic advice and experience from more than 20 years of M&A operations.

process flowchart