As in most countries worldwide, SMEs form the majority of our national companies. More specifically, they represent more than 95% of the Moroccan economy, with 50% of the workforce and investments and providing 40% of production and 30% of exports. Needless to say that SMEs are thus considered the backbone of economic and social growth, and as such do benefit from dedicated public policies in all critical phases: from creation, financing, development to fiscal frame. A Small Business Act, as those existing in Europe and the United States of America, is being shaped, to offer SMEs a specific legal and economic frame.
Could you explain the situation of transfers of SMEs in Morocco? How many SMEs are likely to be transferred in the coming years? Is there like in Europe a lot of companies who should be for sale in the coming years due to ageing of the business owners? (Business Dynamics Study 2011- EU Commission: Approximately 450.000 firms with 2 million employees are being transferred each year across Europe. The study estimated that every year, there is a risk of losing approximately 150.000 firms and 600.000 jobs due to inefficiencies in the business transfers system)?
A great part of our SMEs are family-run since their creation after the Independence in the 1960s. Thus, as in Europe, we face the ageing of the business owners; and although we have no estimation yet, business transfers have a considerable potential, that the government is well aware of. The implementation of a business transfers barometer since 2009 is, as a matter of fact, an important initiative aiming at periodically analyzing the business transfers system in Morocco and its ins and outs, in order to come up with adequate and enhancing measures.
What are the main problems in the field of business transfers? Is it the same as in Europe, namely, the lack of awareness among sellers and buyers, the regulation (tax/legal) not supportive of transfers, the opacity of the market, the lack of preparation and support by professionals, the lack of financing for buyers, ...?
Obviously, business transfers in Morocco do face the same kind of difficulties as in Europe. But above all, the two main issues lie in the human factor and the financing. Let me explain: the owners tend, for cultural reasons, to privilege business transfer to their progeny, putting aside economic and financial logic and thus sometimes threatening the future of the business. The second issue concerns, as I said, the financing, or rather the lack of it: there are no specific financial tools to ease the access for potential buyers to funding. That is, until recently.
What are the support measures in Morocco for business owners likely to transfer their company on the one side and potential buyers likely to take over an existing business on the other side?
The Moroccan government has engaged in numerous policies to support economic growth and promote initiative and entrepreneurship. And arranging financing is clearly crucial in this strategy. In order to support and develop private equity, including buyouts to overcome the funding issue in business transfers, a new regulatory framework of venture capital is under adoption. This legal reform aims at being in line with international best practices and securing the venture capital activity for investors. In 2012, private equity firms raised more than 9 billion Moroccan dirhams (equivalent of 807 million Euros). Aside from the legal review, SMEs do benefit since 2010 from specific financing tools, that extend to business buyouts, like products covering private equity funds targeting SMEs. And more recently, two public-private equity funds – SME Growth and 3P Fund – have been launched, with 40-45% of investments dedicated to business transfers, due to the high profitability of the sector (a 28% gross profit rate in 2012). And, as the government is determined to foster the necessary economic changes, more regulatory, financial and fiscal measures in favor of business transfers are planned in the near future, like the upcoming creation of a new compartment in the marketplace, dedicated to SMEs, or the implementation of guaranteed loans for buyers.
Are there good opportunities for cross-border transfers of SMEs between Morocco and European countries? For instance, French President François Hollande recently underlined the importance of “co-localisation” in order to create connections between SMEs based in Europe, which could grow externally thanks to Moroccan firms...
Morocco strives to become a regional investment and financial hub, thanks to its geographic and economic assets, and its business-friendly legal environment. And as I said before, business transfers have a huge potential and thus constitute an appealing opportunity either for national or international buyers. And considering the tight historical and economic bonds between Morocco and European countries, especially France and Spain, cross-border transfers are more than welcomed and feasible. The ongoing exclusive negotiations on a Thorough and Comprehensive Free-Trade Agreement (ALECA) between EU and our country, to achieve deeper economic integration, can only fasten the process in the business transfers field.On another level, the “co-localisation” approach based on a fairer allocation of tasks and results, promoted by France, can only be beneficial for SMEs in both sides of the Mediterranean Sea. The roots of this “co-localisation” are being set up, like the signature this month of a partnership between the Moroccan union of employers (CGEM) and the French union of SMEs to promote and support commercial and industrial relations and cross-border location.
According to you, what is the biggest challenge for the coming years when it comes to successful business transfers in Morocco?
I strongly perceive business transfer as the key to modernization and emergence of a new breed of entrepreneurs fully equipped and skilled to adapt to a challenging environment. So for me, the success of business transfers is reliant on how private sector handles and interacts with the public ongoing SMEs development and support programs. But we also need to build a statistical database, knowing that we mainly focus today on the qualitative analysis. To conclude with, I would say that the major success indicator in our policy to structure and expand the business transfer system is to see these companies not only survive decades after, but to see them go from SMEs to grow big.
INTERVIEW : Interview of the « ANPME », the « Agence Nationale pour la Promotion de la Petite et Moyenne Entreprise », which Transeo Member BDO Morroco is working with on business transfer
Mrs Latifa Echihabi, thank you for accepting an interview with Transeo, the European Association for SME Transfer. As the Director General of the ANPME, could you first explain the role of the ANPME in supporting SMEs in Morocco?
The ANPME (Agence Nationale pour la Promotion de la Petite et Moyenne Entreprise) implements the sector strategies developped by the Moroccan Ministry for Industry, Trade and New Technologies, among others relating to the modernization of SMEs (“Pacte National Pour l’Emergence Industrielle”, “Maroc Numeric 2013”, “Rawaj”, “Maroc Innovation”, ...). The ANPME founds its action on the specific support programmes, covering all the phases of the business life: start-up, post-start-up, growth and transfer, and for which important funds are available in order to contribute to the success and growth of Moroccan SMEs. For instance, the « Moussanada » support programme aims at supporting 700 companies a year in become more modern and reaching more competitiveness and productivity. The Moussanada pack is made up of different packs of services, covering all the needs of development and improvement of companies, including business transfer. For this programme, the Moroccan public authorities take care of a part of the experts cost and the cost of acquiring and implementing information systems. This public contribution, which ranges from 60% to 80% of the mission cost, can reach up to 1 million Dhs by company. The ANPME also checks the quality of experts it is collaborating with and has a list of competent experts (M&A advisors) who are agreed by the ANPME. The ANPME (update May 2013) has supported 846 businesses, which have benefited from 1318 actions. These companies represent a total turnover of 28 billion Dhs, including 4 billion for export and 76 288 jobs. There is also an other support programme called “Imtiaz », to support companies in the development & growth.
What are the specific services for sale and acquisition of SMEs?
Supporting business transfers in Morocco is essential for us, considering the changeing business demographics in Morocco, characterized by few creation of new companies and many winding up of businesses. Successful business transfers are key to make companies sustainable and dynamic.That is why the ANPME, in partnership with Transeo Member BDO Morocco has issued two editions of a business transfer barometer. The objective of the barometer is to make a state of the art of business transfer in Morocco and to bring recommendations on how to best support companies to ensure their sustainability through successful business transfers. Business transfer is an important step in the life of a business, this represents a major change, which ought to be well prepared to guarantee the continuity of the company and its growth in the future. In order to ideally support business transfers, the ANPME has developped a specific set of services in the Moussanada pack for business transfer. The objectives are:
>To reduce the risks linked to business transfer
>To define the real opportunities of the business to be transferred
- >To be a facilitator of the transfer process
- >To help find the right buyer
- >To support the company in having a strategic vision
- >To guarantee the intergenerational transfer of knowledge and know-how
- >To understand the strenghts and weaknesses of the transferred company and to highlight the possible opportunities
- >To advise and support potential buyers in their buyout and development strategy
- >To facilitate business transfer and match potential sellers and buyers
It is also to be noted that from 2013 on, the partial or total buyouts, including in mergers and acquisitions operations, are now eligible for the Imtiaz programme, which will enable to better support such actions.
Are there any future projects to be mentioned?
In order to maintain the existing support programmes, a new agreement was signed in February 2013 between the Ministry for Industry, Trade and New Technologies, the Ministry for Finances and the ANPME. It covers the 2013-2020 period and guarantees the availability of funds needed fo the ANPME to reach its objectives under the Moussanada & Imtiaz programmes and to launch new support programmes.
INTERVIEW| Interview of Transeo Member Zakaria Fahim (BDO Morocco) on their role in supporting SME transfers in Morocco, in partnership with the ANPME and the Ministry for Economy
BDO Morocco, represented by Mr Zakaria Fahim is the first Transeo Member from Morocco and one of the reference players in Morocco for business transfer issues. Mr Fahim, you have launched, with the support of the ANPME, a new portal called “transmission.ma – could you explain its objective and the main services you propose?
Transmission.ma is a free Internet service for companies looking for successors and entrepreneurs / investors which are interested in the repurchase of a company. Transmission
.ma will propose a vision innovative and diversified of the transfer of companies through a bilingual information (French-Arabic), high-quality, concise, diversified and close to the target.
Transmission.ma will propose a database including information on the entrepreneurs avid to withdraw and who try hard to find the successor for their company. The entrepreneurs or the successors (potential) can become member of the stock exchange of the SME’s Transfers as well as read and answer directly all the electronic announcements. They can also get direct contact with the financial partner found through a dedicated application in the stock exchange.
The portal Transmission
.ma will also propose additional services such as self-assessments and diagnoses, a list of the events classified by subject, with a management of the on-line registrations (inscriptions), a database grouping some documentation downloadable.
Added value services to promote this culture of transfer brought by BDO and ANPME include an on-line evaluation of the company, a diagnosis of the potential buyer and a diagnosis of the potential seller. Transmission.ma will propose a complete and weekly reporting sent to all the partners of the portal.
BDO is the only African member of the biggest Transfer European association TRANSEO.
Mr Fahim, are there today many cross-border transfers of SMEs between Morocco and European countries? In which sectors are there possibilities for sale of Moroccan SMEs to European buyers and for acquisition of European SMEs by Moroccan buyers?
These operations are much more the privilege of the large groups which often come alone and acquire the majority of shares. These cross-border transfers of SMEs between Morocco and European countries concern the activities In relation with the world jobs businesses defined by Morocco (ex : the automobile sector, the outsourcing (dominated by call centers), the agro-industry, the renewable energies and the tourism).
The crisis in Europe can be considered as an opportunity to consider differently the neighbours of the south bank where is Morocco. The objective is to built a strong partnership (win-win). The European company brings some expertise and financing (European subsidies and grants in particular via the EBRD(EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT)) and the Moroccan company will offer its knowledge of the local market and its capacity to bounce on the African market.
It is necessary to move closer SMEs (SMALL AND MEDIUM-SIZED ENTERPRISES) from the 2 sides which share same fears. Both, they can find the solution to strengthen their position which none of the two cannot make alone. The support of the politics to encourage and protect these partnerships is strategic to succeed in this challenge.