Business sellers’ feelings cannot be side-lined when improving change of ownership
“If mergers and acquisitions are unsuccessful, many things suffer: tax receipts, jobs and the related tax takings, competence and property, but also services and the vitality that they bring to municipalities,” says Arto Kämppi, who manages a project on change in business ownership in Uusimaa region.
Paying special attention to changes of businesses’ ownership is essential for maintaining the welfare state. This message was clear when Juha Sipilä, MP, presented a Finnish ownership programme authored by a working group of the Ministry of Employment and the Economy to the media on Thursday 20 May.
The programme is the same one that was published in March. However, the programme, consisting of around 70 actions, will continue to be relevant for some time. If the welfare state is to be maintained, the Finnish economy needs to grow by two per cent annually for the next 10 years. Changes in businesses’ ownership are important for retaining and creating jobs.
According to the latest small and medium-sized enterprise (SME) barometer, the ownership of 85,000 businesses is set to change in the next five years. Of those, 30,000 are in Uusimaa. To ensure those changes in ownership succeed, Uudenmaan Yrittäjät is starting a project to help companies with succession, mergers and acquisitions.
“If mergers and acquisitions are unsuccessful, many things suffer: tax receipts, jobs and the related tax takings, competence and property, but also services and the vitality that they bring to municipalities,” says project manager Arto Kämppi.
It is important to reach business owners, direct them towards the project’s services, develop tools and concepts with specialists, and encourage both business sellers and buyers to be active.
Pain of letting go is real
In addition to services, tools and structures, an important factor in changes of business ownership is the business owner’s feelings. They can find it difficult to let go of their life’s work and entrepreneurial way of life. It can be hard to process the transition without any emotion.
However, delaying the matter may lead to delayed preparation for the change in ownership and an accompanying decline in the business’s development.
Kämppi says, “Until now, discussion of this issue has focused a lot on facts and reason, when for the business owner it’s very much an emotional thing.”
Juha Sipilä’s speech also highlighted problems in the general attitude.
“The hearings for the working group’s report were conducted at the same time as the media was pitting the paper industry against the prime minister. There was talk of patriotism and bearing social responsibility. The predictability of taxation and increasing tax on dividends were discussed.”
The general attitude has improved in Finland, but is still lagging behind its western neighbour.
“If you compare the situation to Sweden, business owners in Finland don’t speak with an owners’ voice. The general attitude is that owning is not work and not a way to make a living. Ownership is almost seen as questionable or dishonest. The change in attitude is slow, but it is changing through financial and entrepreneurial competence,” Sipilä says.
Sweden has also been able to improve the level of ownership knowhow.
“Sweden has managed to productize ownership, which is visible in growth funding for SMEs there,” Sipilä says.
Another difference between Swedish and Finnish businesses is their appetite for growth, which is lower in Finland.
“There’s potential for growth. However, the threshold for becoming an employer business owner is high, and there are bottlenecks in finance. Family companies do not want outside owners, and the role of bank finance has changed over the years. Tesi [Finnish Industry Investment Ltd] is leading the development of finance instruments, and the finance voucher proposed by the working group is a concrete form of assistance,” Sipilä says.
elina.hakola (at) yrittajat.fi