Last month, I had the opportunity to participate in and present at the fifth annual European SME Transfer Summit hosted at the Chamber of Commerce in Luxembourg. The summit was unique and unlike anything I have experienced in the United States in that it included stakeholders from the entire business transfer ecosystem including academia, government, brokers & M&A advisors, service providers (such as legal, accounting, and financing), marketing platforms, private equity firms, and more. The summit's purpose was to have an open dialogue and discourse to address the challenges facing European SME (Small and Medium Enterprise) transfer.
During the two-day conference, experts from around the continent (and beyond) engaged in the sharing of ideas to identify ways to strengthen European cross-border SME transfer. With over 50 international speakers and 200 participants, we covered topics like ways to scale markets through entrepreneurship, the differences between international transfer marketplaces, and how to best match SME sellers and buyers. As one of several keynote speakers, I was excited to share BizBuySell's model and how we've cultivated the most active for-sale marketplace in the United States.
The presentations and collaborative workshops highlighted both the similarities and differences between the American and European markets. Both markets share many common characteristics and challenges, such as an aging population needing to sell businesses to support retirement, a younger generation of family often uninterested in taking over the family business, and how to prepare for, market, negotiate, and finance a transfer. With that said, the European market has some unique challenges that can impede successful and efficient business transfers.
For starters, small business marketplaces are much more fragmented in Europe than in America. Language, regulatory/legal, and cultural differences, for example, impose hurdles that must be overcome to encourage broader business transfer between participants in different European countries. The U.S. has a unique advantage of a more unified large market with a common language, similar cultural norms, and generally lower and similar regulations. In Europe, a couple hour drive can result in a change in the native tongue, cultural norms, and local laws, which can all challenge the sale of businesses across these regions.
Another noticeable difference between European and American markets is the level of government participation and public-private partnerships in the business transfer ecosystem. Numerous government officials were present to discuss the need for international standards and cooperation to overcome the obstacles to business transfers in the EU. In the U.S., on the other hand, while we have the SBA and its supporting partner organizations (such as SCORE and SBDC) that support small businesses, the work of small business transfer is largely being driven by private enterprise and does not have the same level of interest and participation by our public entities. The SBA is more focused on helping entrepreneurs to start and grow small businesses than on transferring them, despite the latter being a much lower risk path to wealth and job growth.
The SME transfer summit was organized by Transeo, the European Association for SME Transfer. Transeo has played a central role in the last decade bringing together the stakeholders in the European business transfer ecosystem and advocating for the industry. Transeo previously led the European "Engaging Users for Business Transfer" (EU4BT) project in 2016, an academic research study which analyzed 35 matching platforms for business transfer (mostly online marketplaces) across 12 different countries and established best practices and standards necessary for successful buyer-seller matching programs throughout Europe. In response to the fragmented market, the Transeo Marketplace was unveiled at the summit to provide a centralized place for buyer and seller profiles across Transeo members and countries.
Despite some differences, the summit revealed that the American and European small business transfer markets have more in common than not. The forces, players, and challenges are fairly universal. Everyone agrees the transfer process can be improved to benefit buyers and sellers wherever they may be conducting business transactions. From increasing the marketplace's accessibility to establishing international regulations for cross-border transactions, participants explored new ideas to streamline transfers and strengthen the entire business transfer network.