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[JPDR0506EN]
Volume 6/05  -  05.09.2005

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13 years ago I concluded a retainer agreement by handshake. My then business partner and client was a Berlin entrepreneur, a shrewd customer, hard, but fair and reliable. When he was young he learned his trade in Vietnam as an employee for an aid organisation. At that time he dealt simultaneously with the Vietcong and the US army. Then in Germany he built up a group of companies, which had sales in the high three-figure million range. In spite of the gloom-mongering of some colleagues  from this client and without any written agreement I also got a fee of several hundred thousand EUR transferred without any problems down to the last cent. Unfortunately my client died much too early a few years ago. Today in particular we need business types with whom you can make deals on a handshake. Today I usually lack the confidence to do business in this way. I feel that morals have deteriorated seriously over the last few years. You can generally see this by apparently insignificant behaviour. In A question of style & . my partner, Hans-Jürgen Kenntner, describes incidents that he has experienced recently.

But there are also pleasing cases. A few days ago I had the pleasure of holding a telephone conversation with the son of the client at that time. He runs the business nowadays. I was immediately aware that he was a chip off the old block. The young man has moral principles that are just as solid as those of his father. And he is just as successful. The young man has succeeded in increasing sales and profitability even further. His father would be proud of his son, were he still alive.

My late client prepared his son for life and succeeding him in the company when he was still less than 20 years old. The son developed software programs, such as an ERP system, for his father's companies, and got to know every nook and cranny in the companies while "playing" at it... He learnt how to handle property deals and discovered how to be successful when he was still very young. His father always stayed in the background and slipped into the role of advisor. An exemplary fitness programme for a follow-up arrangement with his own children. This case also shows how important it is to prepare one's descendants for their future role as company managers.

But what if the children don't fit in to the task of a company boss? If they are always just assistants who will never be able to get out from their father's shadow? If they are too easily satisfied and prefer to get a name as partygoers rather than work? Then their father must act promptly and fathom out other the alternatives.

The article Company successes  Why small businessmen should give early consideration to the descendant problem gives the right tips for businessmen affected by this. The problem of succession is particularly important in Germany. There is one shocking figure: just under 6,000 German companies have to close every year, because the companies have made no arrangements for the future. In Germany approximately 71,000 company successions are pending every year. This affects 700,000 jobs. Frequently the lack of succession arrangements in the banks is the crucial KO criterion. Every owner-managed company should have an emergency plan set out in writing in case the boss is unable to function due to accident or illness. The necessary decisions must be taken promptly.

The report by our new colleague, Prof. Dr. Werner Hoffmann, Use your options  Benefit from business consolidation gives tips on how for example a company with succession problems can use the opportunities from globalisation and market consolidation and secure company values created over generations.

Tips & Tricks explains the term EBIT Multiples and assesses the equity value of a company for example. Every businessman seeking an investment partner to solve a succession problem or wanting to sell his company should know what his company is worth.

In our column Fusions and takeovers you will again find selected interesting takeover opportunities and bids, plus some options for businessmen seeking succession arrangements.

So let's set about it. With this in mind may I wish you a successful September 2005.

Yours sincerely.

Heinz Jäger
- CEO, JP Mergers & Finance AG -

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Acknowledgements & contact

JP Mergers & Finance AG
Schillerstr. 101
D-63512 Hainburg
 

Tel.: +49 (6182) 9904-83
Fax: +49 (6182) 9904-88
eMail: Vorstand@JPMergers.com
Internet: www.JPMergers.com

CEO: Heinz Jäger

Chief editor: Thorsten Manthey

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Confidential copyright © JP Mergers & Finance AG 2005. Reproduction prohibited without preliminary authorization.