Académique Documents
Professionnel Documents
Culture Documents
9
(November 2008)
Mentoring as Part of
the Business Transfer Process
This working paper, which presents the results of the pilot project
of Jakobstad Regional Development Centre Concordia, is part of the
REINO project (Renewal and Innovation to Business Transfers of Micro
Companies). The transnational REINO project is co-ordinated by the
Finnish development company KOSEK. The project is funded by the DG
Employment of the European Commission under the European Social
Fund, Article 6 (“Innovative Approaches to the Management of Change”
programme). The objective of the project is to develop permanent sup-
port services to facilitate business transfers of micro companies. During
the two-year project, partners in Denmark, Finland, Greece and Italy
will map out and test the support services in different phases of the
transfer process.
Ari Peltoniemi
Transnational Co-ordinator
Mentoring as Part of
the Business Transfer Process
1. INTRODUCTION������������������������������������������������������������������������������������������6
4. EXPERT ARTICLES������������������������������������������������������������������������������������ 21
7. CONCLUSIONS������������������������������������������������������������������������������������������ 48
REFERENCES������������������������������������������������������������������������������������������������ 50
ANNEXES������������������������������������������������������������������������������������������������������ 53
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1. INTRODUCTION
Three out of four business transfers tend to fail (Sten 2007). Partially
this can be explained by the fact that as the ownership is shared by an
increasing number of people, the ownership is more difficult to control
and there is less room for the values of the family. The parties invol-
ved may also find discussing the transfer so difficult that the process
is prolonged or even interrupted. The consulting services provided by
the public and private sectors usually emphasize the establishment of
new businesses and the support to growth companies. However, it is
a known fact that business transfers are mentally strenuous proces-
ses, but psychological support has not yet been sufficiently utilized in
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transfer situations. The mentor is often the one who carries forward a
stagnant transfer process. The mentor is an external person who, when
necessary, discusses the situation separately with each person involved
in the transfer process. The mentor acts as a buffer and a mediator of
emotions and issues. In addition, the sharing of tacit knowledge from
the transferor to the successor may be secured through mentoring.
Chapter 4 comprises four guest articles. The expert writers of the ar-
ticles examine the challenges of business transfers from different view-
points. In his article, Sakari Oikarinen discusses the background of the
difficulties experienced in business transfers; Jan Sten analyzes busi-
ness transfers in Finland and Europe on a general level; Piia Tulisalo
deals with the importance of the psychological aspect in mentoring; and
Tua Haldin-Herrgård concentrates on the sharing of tacit knowledge.
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According to the above, Mentor’s duties included a lot more than just
being a teacher. This is where the origins of the concept of mentoring lie
and where it has come to be used. Mentoring is not a new phenomenon:
its roots lie in ancient Greece, and through the ages it has been used to
support the growth and development of an individual and/or company.
Through mentoring, experience-based skills and life wisdom are shared
with an individual willing to learn. Mentoring is interaction that is based
on the chemistry between people, trust and mutual sincerity. In a way,
mentoring is a form of companionship based on the trust that two peop-
le have built between them. Through professional and life experience
the mentor is able to detect tangles and areas which the protégé i.e. the
mentee is, with the support of the mentor, then able to deal with. Both
parties share a strong willingness to grow and learn.
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The crises faced can bring a person to a standstill. Such situations may
be anticipated, but they may also be violent and unexpected. In addi-
tion to bringing a person to a halt, crises tend to trigger off a battle of
survival and development within the person. One starts to think about
the meaning of life and aims to see one’s identity from a new perspecti-
ve. One may seek the company of other people who have gone through
similar experiences. At best, reciprocal social activity leads to transfor-
mative and communicative learning. The previous experience and skills
are compared with the new, and consequently the meaning of things
and the new aspects expand one’s competency and complement one’s
understanding. Reciprocity also contributes to identity development and
community, supports critical thinking and helps to understand diversity.
(Vaherva 1999).
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Only one out of five Finnish family enterprises is transferred to the se-
cond generation; the number is the lowest in Western Europe. (PRIMA
8, October 2005.) In addition, according to separate studies only one
out of ten family enterprises is transferred to the third generation. Partly
this can be explained by the fact that, according to studies, approxima-
tely one child out of five is not willing to continue the family business.
However, the studies show that most family entrepreneurs wish that the
successor comes from the family. (e.g. Stenholm 2003; Malinen et al.
2005.)
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If not enough time is reserved for the generational transfer and its
preparation, the risk of failure increases remarkably. Carrying out a
generational transfer, from planning to completion, takes 5–10 years
on average. The planning and implementation of the transfer is often
begun too late. According to Stenholm, one reason for this is that in
small businesses the issue is not considered important or it is too deli-
cate. However, it is specifically the generational transfer that has been
found the most difficult of all forms of business transfer. This is because
it is connected with social, cultural, financial, legal, strategic as well as
moral issues which are difficult to face and deal with. This will easily
lead to the generational transfer being postponed and pushed forward.
(Stenholm 2003).
Financial considerations
Retirement considerations
A timetable
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The entrepreneur’s age is clearly the most common reason for business
transfers; in Finland, the entrepreneurs’ age distribution has shifted
during the past years. According to the statistics of the Finnish Centre
for Pensions, during 1996–2001 the proportion of entrepreneurs over
50 of all entrepreneurs contributing to pension funds had increased to
more than one third. In the previous survey, one entrepreneur out of
five was 50–54 years old. According to the national census of Statistics
Finland, which also included those entrepreneurs not contributing to
pension funds, the proportion of entrepreneurs between 50 and 74 yea-
rs old grew to almost one third between 1995 and 2000. (Stenholm
2003; Heinonen 2005). The changing numbers give reason to believe
that the number of business transfers in Finland will increase in the near
future.
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transferor has to think about his/her own life after the transfer as well.
He/she has to face the fact that he/she is neither irreplaceable nor im-
mortal, and that there is life both outside and after the business. Both
conscious and unconscious resistance tends to be contagious, and the
situation may lead the company and the owners to a state of ferment.
The company’s economy and competitive capacity may weaken, and
its operation, the whole existence is threatened. Behind all this lies the
transferor’s fear of leaving nothing behind or of the successor not res-
pecting his/her life’s work. Psychodynamic processes work in the backg-
round and prevent the transfer process from progressing. (adapted from
Kets de Vries 1991.)
Public debate often suggests that one of the most important obstacles
to business transfer processes is the difficulty of finding successors for
the retiring entrepreneurs. Another popular reason for the slow prog-
ress of the transfers is that companies are waiting for pending tax le-
gislation and potential tax relieves for generational transfers to come
to effect. Instead, less public attention is paid to the way soft values
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Siikarla (2001:27) has stated that the most important problem in ge-
nerational transfers is not the technical aspects of the transfer but the
entrepreneur him/herself. By this he means for instance that the ent-
repreneur i.e. the transferor has to be psychologically prepared for the
transfer and ready to give up on the company. In addition, the dynamics
and the culture of discussion within the family both have an impact on
the transferor, which then may turn many questions challenging to sol-
ve in connection with a generational transfer. The immediate family is
a close community, but its members are also influenced by other com-
munities they belong to. People belong to several communities, groups,
and the rate of the communities’ influence and the members’ commit-
ment changes from time to time, situation to situation. It can be argued
that we are dominated by the influence of different groups at different
times. We may feel inner conflict; on the one hand, our own hopes and
expectations struggle within us, on the other hand there are certain ex-
ternal expectations upon us. (Lewin 2002.) Conflict may arise when the
successor receives different opinions from for example his wife and her
relatives than from his own relatives.
The importance of soft values does usually not become clear until the
parties begin to discuss the transfer and make concrete plans (Stenholm
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2003; Malinen & Stenholm 2005). Only when the transfer is discussed
in more detail may the transferor realize how big a role the company
has had in his/her life. In addition to having been a means of liveli-
hood and a place of work, the company has also contributed to the
transferor’s identity and self-esteem, and it has been a part of his/her
social network and external respect. The increased leisure time and the
changing status of the family may confuse the transferor. (cf. Koiranen
2000; Lewin 2002; Stenholm 2003.) When the transfer is at hand the
entrepreneur may feel sudden resistance, either consciously or uncon-
sciously.
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spice to the enterprise. And when a family business is faced with a ge-
nerational transfer, it is inevitable that emotions and soft values have
an impact on the transfer process. For instance, when the transferor is
closing in on retirement age it is likely that the children already have
families of their own, and the “inner circle” in which the transfer is dis-
cussed has expanded. Hence, a successful generational transfer is often
dependent on the family’s way of having discussions and solving con-
flicts (cf. Koiranen 2000; Heinonen 2005).
Figure 2. Family business system (Tagiuri & Davis 1996, in Heinonen 2005).
OWNERS
FAMILY
MEMBERS MANAGERS
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4. EXPERT ARTICLES
In the past few years there has been a lot of discussion on family bu-
sinesses, and the reasons for this are many. One of the reasons is,
of course, that the research and training related to family enterprise
has increased during the past ten years (Sharma, Hoy, Astrachan and
Koiranen, 2007). On the other hand, the different organizations atten-
ding to the interests of family businesses have produced fruitful results.
But the fundamental reason for family businesses being in the centre of
attention especially in Finland has to do with business transfers. A sig-
nificant number of Finnish businesses are faced with a business transfer
process in the near future (Prime Minister’s Office, 2003).
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The PwC study shows that more than 50% of the interviewed have
no concrete plan for carrying out a business transfer. What is more,
the figure is even higher when examining companies with less than 20
employees. These numbers are alarming for at least two reasons. First,
a business transfer signifies a great change for the transferor, and se-
cond, the transfer means a great change for the company and its inte-
rest groups as well.
It is evident that the lack of a business transfer plan poses a great risk
to the entrepreneur. However, an even greater risk is that the entrep-
reneurs have not given enough thought to life after the transfer. How
does the entrepreneur plan to fill his life, when he is no longer involved
in the business? All of a sudden there are many hours a day to be filled
with other activities. But with what? Many entrepreneurs are not able
to give any satisfactory answer to this question. This fact can partly ex-
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plain the reasons why a business transfer plan has not been drawn up.
The entrepreneurs have simply not been willing to really think about the
time of retirement yet.
The lack of a business transfer plan signifies a personal risk to the ent-
repreneur, but at the same time it poses a threat to the business as
well. Not having the transfer plan easily creates uncertainty about the
future, and uncertainty then reflects weaker ability to make important
and far-reaching decisions. Decisions are not made because it is un-
certain what the future holds. Will the children continue the business?
Could someone really be interested in buying the company? The un-
fortunate answer to these questions is that if the current entrepreneur
neglects to develop the company, he is running the risk that no one is
willing to continue the business after his retirement. If the entrepreneur
is left wondering and slows down at the same time, the company is no
longer attractive as an investment target. It is a situation that no one
will benefit from, and unfortunately it can easily become a vicious cir-
cle. The staff will become aware that the company is not invested in as
much as before. Sooner or later both customers and suppliers will make
the same observation. When the company has reached this point it is
extremely difficult to change the course of development. To cut a long
story short: by anticipating the situation and by drawing up a concrete
plan for the future business transfer, all these negative forces can be
fought against. At the same time the entrepreneur must make sure that
the company’s own investments at least maintain their value.
Many kinds of conflict may arise, but certain themes seem to provo-
ke discussion more than others. The most important cause of dispute
seems to be disagreement on the company’s future strategy. This will
easily become a stumbling block for the whole business transfer. The
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As to the reasons for conflict and the lack of a business transfer plan,
there seems to be no great differences between Finland and other
European countries. We are all equally poor at preparation. However,
there appears to be a certain difference in successor preferences. A
generational transfer has a stronger position in several European count-
ries as well as in the United States. This is partly explained by the
differences in family culture, but the distorted understanding that the
number of acquisitions will increase in Finland has lead the entrepre-
neurs to consider an acquisition the more attractive option. As to these
entrepreneurs, there are two points that must be highlighted: First,
most entrepreneurs have nothing to sell, which is why there will be no
buyer either. The company for sale is simply too closely bound to the
current owner, and when he retires there is nothing left to sell. Second,
it is difficult to sell the company if the sale has not been actively plan-
ned. Business valuation would be a good starting point. It should not be
considered an expense but rather an investment.
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siness instead of starting a new one, which indicates that the number
of potential buyers is one of the critical elements. As approximately
30,000 new businesses are established in Finland every year, around
4,500 of these new entrepreneurs could be company buyers. Based on
this calculation the number of buyers should be sufficient, since it has
been estimated that the number of companies for sale each year is ap-
proximately the same.
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The buyer for his part is searching for a place that he can renovate as he
pleases and then invite his family to a housewarming party. The buyer
buys a business opportunity, whereas the seller sells a company he has
established himself. This may well be one reason why the buyer’s and
the seller’s views do not meet. We have also a lot to learn about the
culture of company acquisitions. Buying a company instead of setting
up a new one is still a fairly new phenomenon in Finland. Therefore,
the buyer does not have previous experience of acquisitions either, so
he feels sceptical about the new situation. The buyers still clearly lack
the systematics of buying. Many consider the option of buying in a too
early stage of their entrepreneurial careers; they are searching for a
business to buy in a stage when they do not even know what they are
looking for. They do it in order to find ideas for their own business idea
(i.e. entrepreneurship). As they are searching for companies for sale,
in reality they are nowhere near the decision of buying. These hesitant
buyers of course confuse the seller even more. We must keep in mind
that the seller is very likely selling his company for the first and the last
time – the situation is unique for him. The buyers should first draw up a
business plan and then decide whether they want to start the business
by establishing a new company or by acquiring an already existing bu-
siness. Practice has clearly shown that an entrepreneur who has bought
a company as a systematic process is clearly more enthusiastic about
buying more companies in the future; he regards growth easier by ac-
quisition. The threshold of buying becomes lower by experience.
From the buyers’ point of view it also seems as if they were expecting
for someone to come and offer them a company to buy. In several ent-
repreneur training events and on Internet forums these company bu-
yers ask where the companies for sale can be found. They are confused
because they hear that there will be a lot of businesses for sale in the
near future, but still the businesses are nowhere to be found. The buyer
candidates do not necessarily notice that a company as an object of sale
is such that sellers do not willingly put it for sale on the Internet. As re-
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gards many other items and services, the culture of buying is very open
and free, which is why the buyers are confused about the atmosphere
of mystery surrounding company acquisitions. The buyers should noti-
ce that companies are all around us, and the one who actively inquires
will find a company to buy – for instance by stepping into a shop and
asking, “Any chance this business is for sale?”
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from it is such a big deal that it takes time to think about it? Surely this
is the case, but an active approach is an asset in business transfers as
well. If all parties concerned take an active role in the matter, together
we can surely make the business transfer market work as well.
Emotions may arise when one has to give up on the daily life and routi-
nes, concrete things (office, desk, telephone, car) or relationships con-
nected to the business. Many entrepreneurs or entrepreneurial couples
have found new friends, hobbies or long-term cooperation or customer
relationships within the business, and they are doubtful about letting
them go. Uncertainty about the future and one’s own status and role
may from time to time come strongly to the surface. Sometimes the
emotions may even impede the progress of a concrete business transfer.
In the background there are usually previous experiences on life chan-
ges, events related to personal or family history, stages of one’s ent-
repreneurial career or other, significant passages of life. As the situation
proceeds, the memory trace is activated in one way or another, having
an effect on the present discussion or even on decision-making.
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in the way how strongly we react to changing situations. One may expe-
rience new challenges as the ‘elixir’ of life, whereas the other may feel
incapable of getting hold of the situation and becomes passive in the
increasing pressure. It is evident that the ability to control and endure
stress is different from person to person. At a deeper level, the changes
in one’s role may be seen as changes in self-esteem, self-confidence
and self-assurance. The previous, safe and familiar role as an entrepre-
neur changes into something else. And the new role does not, at least
at first, feel as cosy as the old one.
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Summary
We have long been presented with scenarios of what will happen when
the baby boom generation retires. That time has now come, and tra-
ces of the feared labour shortage can already be seen in working pla-
ces. According to Professor P. Malinen, we are now in the middle of an
era in which almost 50% of businesses in Finland have to carry out a
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The problems of sharing tacit knowledge result from the lack of percep-
tion, language, time and values, as well as an increasing distance.
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The mentoring process includes precisely those factors that are said
to facilitate tacit knowledge diffusion: close contact, time and direct
communication. The mentor and the mentee have to meet each other
constantly during the process in order to discuss matters in peace and
quiet. Since the process derives from the mentee and his needs, it is
guaranteed that the connection to the mentee’s work and situation is
maintained, in other words the connection to the issues that tacit kno-
wledge is needed for. In working life today, where everything is often a
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struggle against time, it has been noticed that specific meetings, such
as lunch meetings, have provided an important escape to reflection and
discussion.
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Carola Wiik, who worked as Project Assistant within the REINO project
at Concordia in the first few months of 2008, conducted a survey ai-
med at both entrepreneurs and mentors. The survey was carried out
in January-February 2008. The objective of the survey was to map out
the respondents’ experien ces of business and generational transfers.
In this survey, the term business transfer was used to indicate the sale
of a company to an outsider, and the term generational transfer was
used to indicate a transfer within the family, mainly to a child/children.
The survey was conducted in the regions of Ostrobothnia and Central
Ostrobothnia, and it was participated by 7 entrepreneurs, 5 mentors
and one expert. Two of the entrepreneurs were transferors and 5 were
successors, and they were mostly active in production industry and the
service sector. Three of the mentors had personal experience of ge-
nerational transfers, and one of them had been involved in a business
transfer by selling a company to a third party. The expert participating
in the survey acts as a consultant and an expert in business transfer
issues and concentrates on business valuation, anticipating tax con-
sequences and on finding successors. In business valuation he makes
assessments, both from the seller’s and the buyer’s point of view, on
whether the acquisition is more profitable when carried out as purchase
of shares or as business acquisition. In addition, he prepares the sales
agreements and assists in finding funding.
The answers also pointed out that in a generational transfer the owner-
ship should be transferred in such a way that there will be one person
clearly in charge in the company, a majority owner. Sharing the company
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for instance 50/50 between two children was considered a bad option.
The transferors and the mentors also pointed out that the psychological
aspect is the one to launch the process, after which the technical pro-
cess and the psychological process go hand in hand. In addition, both
transferors and mentors stressed that although technical issues play a
significant part in the transfer, that is exactly what they are, technical
and self-evident issues, for which expert advice is available. The survey
indicated that business valuation is also affected by emotions.
The survey clearly showed the difference between a mentor and a con-
sultant. A consultant is mostly referred to in technical issues, whereas a
mentor is a psychological supporter. In addition, the mentee may share
such information with a mentor that affects the process but that he/she
is not willing to share with a consultant. Hence it is important that the
mentor and the consultant can work side by side. The mentor is also
often the one to carry forward the process, especially if it has become
stagnant for different reasons.
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The survey for the technical expert pointed out the importance of finding
the right price agreeable by all parties concerned. The buyer and the
seller must feel that they are on the same wavelength, and someone
has to act as a mediator who “refines” the selling price until it pleases
both the buyer and the seller. It was also highlighted that, usually, the
smaller the company the less the use of consultants. The expert also
considered soft values to have an impact on the transfer process. He
also considered important that there be enough time to weigh different
options.
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In mentoring, the role of the mentor is to discuss and ask. The mentor
questions and asks questions such as “what do you think, what do you
feel and why”. In this way, the mentor helps the mentee to see different
options and draws attention to the consequences of various decisions.
The most important task of the mentor is to listen to the mentee and
encourage the mentee to share his/her thoughts. It is natural for us to
process difficult issues by talking to a person we trust. In this way the
mentee gains distance and is better able to see solutions and options
than by merely pondering the issues alone. (Ahlström 2002.)
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It can be stated that with the maturity brought by age, people tend to
operate more and more according to their own goals and objectives.
However, emotions may mix up this rational thinking, and suddenly one
is not able to organize or interpret one’s observations. In this situation,
peer support helps him/her to develop his/her proactive stance towards
the world and his/her own development.
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Figure 3. Individual transformation process (Kübler-Ross 1984, in Petäjä & Koponen 2002).
Change VISION
Beginning
Denial Development
Emotional response
Anger Testing
Bargaining Acceptance
Depression
Exit strategies
Time
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Figure 4. The development cycle of a mentoring relationship (Petäjä & Koponen 2002).
Termination
Meeting
Observation Creative
Emotional response
existence
Adaptation Cooperation
on role level
Confrontation
Time
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1. Mapping of 2. Tailor-made
customer´s matching 3. Contract
needs
Support
processes
The process begins with mapping out the client’s needs (step 1). Here,
through private interview the co-ordinator of the mentoring activity cla-
rifies the client’s i.e. the mentee’s so called problem and the basic infor-
mation of the company. In the interview the co-ordinator also gains an
idea of the mentee as a person, which will help the co-ordinator to find a
suitable mentor for the mentee. As mentioned before, the cornerstones
of mentoring are mutual trust and openness, as well as interpersonal
chemistry. In this interview the co-ordinator also discusses the basic
principles of mentoring, ethical rules and other “rules of the game” with
the mentee.
In the next phase (step 2) the mentor and the mentee meet each ot-
her. The person leading the activity arranges the meeting, and it is re-
commended that the co-ordinator also participates in the first meeting.
Before the meeting the co-ordinator has ensured that the agreed time
is suitable for both parties. The parties have also been informed of each
other. The first meeting is about getting to know each other and map-
ping out and reviewing the mentee’s “problem”, objectives and expecta-
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tions. Here it is also good to revise the rules and see to that the mentee
already at this stage makes the next appointments with the mentor. As
a mentor, you can give “homework” to your mentee in the first meeting
to be completed for the next meeting. The homework will clarify the
mentee’s objectives and contribute to the meetings being factual. Of
course, the meetings will include the usual courtesies and telling the
latest news, but as a mentor you must see to that the meetings will not
be drawn out over two hours and that the meetings are more than just
“chatting over coffee”.
The actual mentoring begins at step 4. The parties have met each other
and the pair work begins. At the beginning, when the parties do not
know each other well and there may be a lot to deal with, it is good to
meet a couple of times a month. As a mentor you encourage the discus-
sions by actively asking your mentee about his/her views and emotions
and his thoughts about the case/”problem” so far. Building the trust is
easier when you as the mentor share your own experiences and help
the mentee to see the “big picture” of the situation as well as possible.
In this way you are also helping him/her to gain new views, solutions
and perceptions about the case.
However, remember still that your role as the mentor is more about lis-
tening than telling! In the early phase you will notice that your mentee
tests you and your trust in a way. You do not have to get frightened
about this or consider it a bad thing; it is natural and part of the early
stage. Since your mentee does not know you and most likely it is a uni-
que situation for him/her to be able to discuss with a peer who under-
stands the situation he/she is in, he/she will give you his/her story piece
by piece. Wait patiently and let the mentee open up slowly.
In this phase at the latest, as a mentor you will notice how much you
will gain yourself by being a mentor. When asked, mentors say they
learn new things, gain new aspects and understand things in different
ways than before; their networks expand, they meet new people, and
they maintain their own skills and competencies without even noticing
it, etc. Many mentors state that the most important reason for becoming
a mentor is the willingness to help as well as the interest towards the
wellbeing of the area they live in and the companies operating there.
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The next phase in the process flow chart is follow-up (step 5). Although
you as a mentor have been instructed that the mentee is the active
party and it is the mentee’s responsibility to take care of the commu-
nication with the mentor and see to that the meetings take place, you
can very well contact your mentee between the meetings as well. Often
the mentee gains many new aspects already in the first meeting and
becomes so enthusiastic that suddenly he/she notices that a lot of time
has passed and he/she has forgotten to contact the mentor… and now
they are too embarrassed to contact you.
Notions about the process flow chart for the instances co-
ordinating the mentoring activity
The meetings between the mentor and the mentee may take place
“anywhere”. Some mentoring partners go for walks together, meet for
lunch or depending on the situation arrange meetings at the company’s
facilities. They may also meet at the facilities of the organization co-
ordinating the mentoring, especially when an impartial space is needed.
The person in charge of the activity sees to that the facility is quiet and
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reserved for the mentee and the mentor for the entire time the meeting
takes place. It is also a good idea to set out tea/coffee or other small
snack.
Step 3 is above all a formality. Not nearly all the instances who orga-
nize mentoring use the written agreement. However, it is good to take
the agreement into use when the operations expand and the number of
mentoring partners grows significant. It is worth remembering that the-
re is no contract of employment between the mentor and the mentee or
the mentor and the co-ordinating organization. Hence, the insurances
of the above mentioned organizations do not protect the mentor. The
written agreement is also an excellent way of committing the mentee
and reminding him/her of being the active party who also takes care
of communication with the mentor. It is also recommended that the
agreement state the mutual obligation to observe secrecy and that the
mentee is independently responsible for decision-making and any ac-
tions taken, that the mentoring is voluntary and it may be ended at any
time, whether the activity produces any expenses to the mentee, and
anything else considered necessary.
Step 4 consists of pair work between the mentor and the mentee and
does not require much from the co-ordinating instance. Of course, if
the mentor and the mentee wish to have their meetings at the co-
ordinator’s facilities, the facility should be provided accordingly. At the
beginning of this stage the co-ordinator should be in contact with both
parties and make sure that everything goes well, that the meetings are
held and that they are target-oriented.
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The support processes at the centre of the process flow chart can in-
clude e.g. training and coaching for both mentors and mentees, consul-
tation by an external consultant, specifically tailored training etc.
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7. CONCLUSIONS
The emotional ties to the company and the sharing of tacit knowledge
are often factors that complicate the transfer of ownership from the
transferor to the successor. This report has presented such business
transfer related soft values, the extent and emphasis of which are in-
dividual, depending on the company. Hence, there is no one and only
solution to the issues related to business transfers, especially when
emotional and psychological factors slow down the process and conse-
quently cause problems between the old and the new entrepreneur.
The surveys for both mentors and entrepreneurs showed that emotional
and psychological aspects have an important role especially in genera-
tional transfers. The survey also indicates that the transfer process is
still not begun early enough. It also seems that the transferor holds the
key position in generational transfers in particular, and that at least on
some level the transferor has to deal with the psychological aspect of
the process, after which the technical issues can be dealt with.
All three groups (transferors, successors and mentors) hoped for more
support from the society and the public operators to the different pha-
ses of the transfer process. In addition, the respondents hoped for
more seminars and information and training events to promote busi-
ness transfer processes. Networking with other entrepreneurs in similar
situations, examples of successful business transfers, as well as peer
support were some of the respondents’ suggestions for actions facilita-
ting business transfers.
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REFERENCES
Juusela, Tuulikki & Tuula Lillia & Jari Rinne (2002). Mentoroinnin monet
kasvot. Helsinki: Yrityskirjat Oy. ISBN 952-9660-31-6.
Lankinen, Paavo & Asko Miettinen & Veikko Sipola (2004). Kehitä osaa-
mista – hyödynnä kokemusta. Talentum Media Oy. p. 83-127. ISBN
952-14-0871-5.
Lewin, Kurt (2002). Resolving Social Conflicts & Field Theory in Social
Science. Washington: American Psychological Association. p. 1-121.
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Sharma, P., Hoy, F., Astrachan, J.H., and Koiranen, M. (2007): The prac-
tice-driven evolution of family business education. Journal of Business
Research, 60, 1012-1021.
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Sten, Jan (2007). The introduction ”Miten mentori voi olla avuksi kun
sukupolvenvaihdosprosessi ei etene.” In the seminar ”Yrityksen omis-
tajanvaihdos vaati pitkän henkisen valmistautumisen.” 24.4.2007.
Ammattikoulu Optima, Pietarsaari.
Sten, Jan & Sakari Oikarinen (2007). Process Flow Chart for Business
Transfers. In series Reino (Renewal and Innovation to Business Transfers
of Micro Companies) Project. Working Paper No. 1. Kokkola: KOSEK,
Kokkolanseudun Kehitys Ltd. ISBN 978-952-5721-04-1.
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ANNEX 1
QUESTIONS FOR COMPANIES ABOUT THE BUSINESS
TRANSFER OR GENERATIONAL TRANSFER PROCESS
3. How long did the process take from the point of initiation, and has
the process now been completed?
4. What kinds of different phases can you identify in the transfer pro-
cess?
6. Have you consulted any experts during the process, and if so, which
fields of expertise have they represented?
10. Did you feel the need for a psychological mentor? If so, did this per-
son come from inside or outside the family?
11. Which aspects of the transfer were easy, which were considered dif-
ficult?
12. Did the sharing of experience-based competency and skills, the so-
called tacit knowledge, pose any challenges, and if so, what kinds?
13. What was the most important problem in the whole process?
15. Are there any other specific issues you would like to bring up?
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ANNEX 2
QUESTIONS FOR MENTORS ABOUT BUSINESS TRANSFERS
AND GENERATIONAL TRANSFERS
8. Does the company you act as a mentor for use any outside consul-
tants in the process, and if so, which issues does the consultant deal
with?
10. In your opinion, when should a psychological mentor inside the fa-
mily be used, and when outside the family?
14. Are there any other specific issues you would like to bring up?
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ANNEX 3
QUESTIONS FOR TECHNICAL EXPERTS
3. Which of the phases requires the most time/effort /which is the most
challenging one?
6. Have you noticed if soft values have any impact on the process, and
if so, in what way?
7. In your opinion, what kind of a role do soft values have in the pro-
cess?
8. How can you help if you notice that soft values are slowing down the
transfer process or even bringing it to a halt?
9. Do you believe that the need for consultants will increase in the fu-
ture, and if so, which are the lines of business that are affected the
most?
10. Can you think of anything else that may have an effect on the techni-
cal process?
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ANNEX 4
A COMPILATION OF THE ANSWERS OF THE SURVEY
THE TRANSFERORS
The psychological aspect, which in fact launches the whole process, and
the technical aspect. Usually, both are experienced during the transfer,
often parallel.
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Soft values and emotions have a great impact on all kinds of processes.
Since the transfer is a process between generations, emotions and soft
values can have a significant effect on how the process progresses. The
general opinion is that soft values are clearly more challenging than
technical issues.
Consultants
Some companies have also involved consultants in the process, and the
opinion is that mentors can easily work side by side with consultants.
The mentor often receives such information that is not shared with the
consultant but that can have a crucial role in the process. Hence it is
important that the mentor and the consultant can co-operate in difficult
cases. The mentor can also suggest consultants to the entrepreneur.
Specific problems
All cases indicated the problem of timing. The process is not launched
early enough.
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THE SUCCESSORS
Some of the respondents have been active in the family business for a
long time, and they have started as summer workers in the company.
They have had the opportunity to try several duties in the company and
they have worked within several departments.
For some, the process has already come to an end, whereas for others
it is still unfinished. Those whose process is still going on believe that it
may take a long time before it will be finished. It is impossible to esti-
mate how long it can take.
One of the respondents has not yet started the process; he has only
managed to think about the issue with his partners. In this case the
situation is a little different, because the company has several owners
who are not related. However, they all have children who could be po-
tential successors, but they are too young at this stage. In addition, one
of the company’s employees is a potential successor after the transfer.
When asked about the different phases of the process, one of the res-
pondents considered it very important that the tacit knowledge of the
older generation is shared with the younger one. The opinion is that a
lot of progress has been made when the post of Managing Director has
been transferred to the next generation.
Technical challenges
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The respondent about to launch the process considered that now was
the time he needed a mentor the most.
Most respondents thought that they had received all necessary advice
from the consultants, and they considered an outsider’s point of view
important. The respondent who had not yet started the process had had
the first technical evaluation done, but considered yet another one.
Psychological challenges
The respondent who had not yet begun the process: The fact that there
are several co-owners has an impact on the process; there are many
different opinions and future plans. Some may be willing stay in the
company longer than others. Persuading the candidate to become a
successor was considered a psychological challenge.
The need for a mentor from within the family and from outside
the family
The need for a mentor from both inside and outside the family came
up in all responses. One of the respondents has discussed his problems
with other entrepreneurs as well. The one who had not yet begun the
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One respondent said that it would be good if there was free consultation
available for both technical and psychological issues. One respondent
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stated that the society could provide support in fiscal issues and trai-
ning. Considering other entrepreneurs, it is also important to bring up
successful examples to show that a generational transfer is feasible.
It is also important that the younger generation is informed about the
transfer by the older generation as early as possible. One of the respon-
dents suggested that the state should organize a support system for the
successor, which would facilitate the continuity of the business.
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THE MENTORS
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Soft values and emotions have a great impact on all kinds of processes.
Since the transfer is a process between generations, emotions and soft
values can have a significant effect on how the process progresses. The
general opinion is that soft values are clearly more challenging than
technical issues.
Consultants
Some companies have also involved consultants in the process, and the
opinion is that mentors can easily work side by side with consultants.
The mentor often receives such information that is not shared with the
consultant but that can have a crucial role in the process. Hence it is
important that the mentor and the consultant can co-operate in difficult
cases. The mentor can also suggest consultants to the entrepreneur.
Specific problems
All cases indicated the problem of timing. The process is not launched
early enough.
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THE EXPERT
The valuation of the business calls for discussion in order to find the
right price – not too high, not too low. Various business valuation met-
hods.
There has to be a mediator between the buyer and the seller, who aims
to adjust the price so that it would satisfy both parties. It is important
that the buyer and the seller feel that they are on the same level.
Finding a serious buyer. If there is more than one buyer, they should not
be made to compete with each other.
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