There are many different paths to entrepreneurship. While for some it involves setting up a new business (making an idea a reality), for others it involves buying out and developing an existing business. What are the different phases of takeover entrepreneurship? What are the best practices to adopt and the pitfalls to avoid? To answer these questions, we have drawn on the resources and testimonials of the EDHEC Alumni community. As its primary source, this article draws on the experience of Romain Rougier (EDHEC Master 2004, Managing Director of BIOBJECT FRANCE), who moderated the “taking over a business” webinar as part of the 2020 Alumni Summer Session.

Taking over a business is entrepreneurship!

The need for autonomy and room for manoeuvre often underpins the ambitions of takeover entrepreneurs. The businesses purchased usually operate on a human scale and require a management approach based on trust and the autonomy of each stakeholder. But we should never forget that taking over a business is not the same as “getting a new job”; it is very much an entrepreneurial project.

“You need to have a vision and an objective to develop the business, to help it grow. You need to give it everything, it’s a life project that will have an impact on much more than your professional life.”

So ask yourself certain questions to visualise your project before taking the plunge:

• Which business sector am I interested in? Which market?
• What skills do I have in this sector? What knowledge do I have of this market?
• Do I want to manage teams of 10 people? 30 people? More?
• Do I have the finances I need?
• Do I want to take over a business on my own or with associates?

One of the advantages of taking over a business is that it’s an opportunity to change business sector and experience a new ecosystem. The most important thing is to properly identify your skills and make the most of your past experience. You need to be passionate about the target business and sector! In a webinar on this subject, Roumain Rougier described taking over a business as “a new adventure that will never be a success without passion and heart.”

Carefully prepare your meeting with the potential seller

So you’ve chosen a business that matches your criteria. Now it’s time to prepare for your first meeting with the owner. He or she will be an indispensable partner! Find out as much as you can about the business, its internal operations, its clients, suppliers and competitors. “You will have to prepare a sales pitch and present yourself as an entrepreneur, but without going over the top! Don’t reveal all of your ideas and strategic plans, there is a long way to go...” This first encounter should give you a sense of what the owner is like and allow you to develop a good rapport. It’s important to assess how motivated he or she is to sell. To do this, Romain Rougier recommends asking one key question: “What will you do after selling your business?”

“If the owner has plans, ambitions and dreams, it’s a good sign! Remember that around 80% of failed business takeovers are the result of the owner no longer wishing to sell. It is imperative to appreciate how motivated the owner is and develop a good relationship.”

Your first days in the company

Now you’ve signed off on the deal! Romain Rougier shares his own personal experience: “the day you sign is very moving, it’s the end of a long process and there is relief and joy that the project is finally coming to fruition.”

Arriving in the company is always a unique moment. “Don’t forget that internally you don’t know the company as well as anyone else, so be modest.” This advice from Romain should be taken alongside these recommendations:

• “work on your internal communication, the story you and the seller want to tell 
• spend time with staff members, get to know each position
• conduct individual meetings, develop a sense of the different characters and personalities of staff 
• don’t go to see your clients and suppliers right away! Wait a month or so and immerse yourself in the company first 
• target small operational successes to improve the company’s finances and make staff more comfortable: no big upheaval from the outset
• don’t start implementing new processes all over the place!”

Here’s another important observation made by Romain: “the risk after the purchase is the solitude of the takeover entrepreneur.” Surround yourself with good people you trust.

Taking over a business truly is an entrepreneurial adventure. It’s a process that requires you to respect certain key phases but also to act with empathy towards the seller so you can better understand his or her expectations and needs. But the conclusion of this long process is ultimately that “people who see things through are nearly always very happy with their choices. They target the businesses that interest them. It is intense, exhilarating and exciting.”