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Finnvera’s Janne Koivuniemi: Vitality of the SME field requires stirring up the hidden entrepreneurial potential and understanding the value of companies

07.11.2018

Finns are entrepreneurial in nature – maybe even unknowingly. Many are cautiously interested in entrepreneurship but do not know how to get started or how, for example, funding of EUR 1.5 million could be arranged for a business acquisition. Finding latent entrepreneurial potential is important for the vitality and growth of the SME field; according to a recent study, there are 50,000 companies in Finland that will change owners over the next few years. “More attention must be paid to understanding the value of companies”, Finnvera’s Regional Manager Janne Koivuniemi says, who was awarded on Tuesday as the Expert of the Year in the Transfer of Ownership.

The recognition was granted by the extensive Transfer of Ownership Forum composed of business life and corporate field players. Among the reasons for the selection were Janne Koivuniemi’s active and consistent work in accelerating changes of ownership, networking in the creation of the Transfer of Ownership Forum as well as his role in the development of the business acquisition market.

“Speeding up transfers of ownership is first of all legwork and activating interest groups”, Janne says. He has focused on transfers of ownership for a good two years now, gone around giving speeches and meeting experts and entrepreneurs. Through these events, the message has reached thousands of listeners. Along the road, the core of the matter has intensified and grown clearer.

"Awakening and awareness are needed on how the seller sees the transfer of ownership process, how to prepare for the sale of the company and what kinds of experts are available. Buyers should be encouraged by mentioning business acquisitions as an opportunity to become an entrepreneur or grow one’s own company, and that funding can be arranged even if one’s own capital is not yet of a large-scale."

Luckily, different parties’ strong cooperation in speeding up transfers of ownership has started to show: nowadays, a lot of spontaneous enquiries are made regarding the possibility for business arrangements.

Entrepreneur, understand your company’s value and how you can affect it

The new transfer of ownership barometer shows that economic good times have been good times for transfers of ownership. Finnvera and Suomen Yritysvälittäjäin Liitto estimate that the number of transfers of ownership has been growing about 10 per cent during the past three years and that about 2,000–3,000 transfers of ownership are carried out in Finland annually. Of these, Finnvera has been involved as a financier in 1,000, and Finnvera’s role has remained strong in transfers of ownership.

According to the barometer, buyers have faith in future business opportunities. From the sellers’ point of view, there are a good amount buyers around, and the sale prices are at least reasonable.

Understanding the value of a company forms the basis for the determination of the purchase price, and thus it is a key element for a successful business acquisition. According to Janne Koivuniemi, many entrepreneurs do not think about the value of the company if they feel that the sale is not topical. However, it would be smarter to be aware of the value of the company and critically reflect on what it consists of and how the value could be developed. And not only when one is getting close to retirement.

"When a company is in good shape, it entices more buyers and the kind of buyers who may have a better financial position. This is naturally a favorable thing for the seller."

Often, the challenge is that SMEs are strongly personalized by the entrepreneur. How is the value then determined? Also, surprising factors may affect the success of a business acquisition if the main customers or experts leave with the previous owner. It means that a buyer for the company should be found who not only is able to arrange financing but also commits and has something to give to the company.

"I have seen great regenerations and leaps of growth when new owners with fresh eyes utilise the potential in the company."

Cooperation increases the impact of speeding up transfers of ownership

Speeding up transfers of ownership benefits from the extensive cooperation that the Transfer of Ownership Forum promotes. Members of the Transfer of Ownership Forum include: the Ministry of Economic Affairs and Employment of Finland, the Confederation of Finnish Industries EK, Suomen Yrittäjät, Finland Chamber of Commerce, Finnvera, Business Finland, Fennia Group and Elo, Nordea, Danske Bank, Suomen Yrityskaupat, the Finnish Enterprise Agencies, the Association of Finnish Development Companies, Business Mentors Finland and Seinäjoki University of Applied Sciences.

"It can genuinely be said that the cooperation between us is more than the sum of its parts. When operating in the network, we achieve more than single players aimed at meeting their business interests. With the same resources we have more impact, which is very important because the vitality of the SME field and pushing companies forward benefits the entire society."

According to the current Transfer of Ownership Barometer, almost 50,000 companies, including single entrepreneurs, are facing a transfer of ownership within the next decade. Janne Koivuniemi emphasizes that it is important to introduce SMEs to business acquisitions and transfers of ownership because a transfer of ownership often brings along a growth and reform spurt, which at its best encourages companies to become international.

More on the topic:

Are you thinking about selling a company? Are you thinking about buying a company? Information about transfer of ownership on Finnvera’s website.

Janne Koivuniemi from Finnvera is the Expert of the Year 2018 on transfers of ownership

Transfer of Ownership Barometer 2018

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