SME succession: evergreen fund or closed-end fund?

If you want the fund to back your successor after you leave, pick a fund with no fixed exit date, or a closed-end fund with well over four years of life left. If you want to sell the whole company in four years, a closed-end fund whose term lines up with yours can actually help the sale.

Four years is the right lead time to prepare a succession. It is also the horizon where a fund's calendar can collide with yours. Everything below comes down to one question: who wants out, and when.

Set your own exit scenario before you pick the fund

The type of fund follows from your scenario, never the other way round. Three questions settle it:

1. Do you want to cash in part of your stake now? If so, an owner buy-out lets you sell part of your shares to a holding company you still own, alongside the fund.
2. Who will take over management? Your managers (MBO), an outside buyer (MBI) or a family member.
3. Must the company stay independent? Or would a sale to a trade buyer be acceptable to you?

The answers change everything. An owner who wants to hand over to his production director does not need the same shareholder as one waiting for an offer from a German competitor.

Closed-end or evergreen: which fits a four-year exit?

A closed-end fund has an end date set when it is created: it must sell all its holdings before that term to repay its own investors. An evergreen fund, or permanent-capital fund, has none. It reinvests the proceeds of its exits and chooses when to leave together with the company. Both models are covered in detail in our guide to evergreen vs closed-end funds.

The table picks no winner. It picks a fit. A closed-end fund is a poor choice for a slow family handover and a good one for a joint sale to a trade buyer. Evergreen flips those roles.

ORSA (formerly Investsud) describes itself as an open-ended evergreen fund with no imposed exit horizon and publishes a dedicated path for SME succession. Its published ticket runs from €500,000 to €2,500,000, for Walloon SMEs with 20 to 150 staff. ORSA also explains on its evergreen fund page what the model changes for an SME.

How many years does the fund have left?

That is the number that decides, and it is rarely in the brochure. The "closed-end" or "evergreen" label is not enough: a young closed-end fund can offer a longer horizon than an evergreen fund keen to turn its portfolio over.

Here is what the players publish themselves about their horizon, taken from their websites on 15.10.2026:

The Theodorus durations apply to seed funds, not succession funds. They still give a useful order of magnitude for doing the maths.

A worked example, not a real fund. A 12-year closed-end fund joins your cap table in its 7th year. It has 5 years left. You leave in 4 years: it will have 1 year left after your departure to sell. In practice, it will want to sell when you do, and most likely 100% of the company. Run the same numbers with a 14-year fund joining in its 4th year and you get 10 years left, so 6 years after you leave. That second fund can stand behind a successor.

How do you prepare the exit over four years?

By writing the exit on the day the fund comes in, not the day you leave. Reading shareholders' agreements from the owner's chair, I have seen the same gap several times: everything was planned for the fund's entry, nothing for the founder's exit. When the day comes, the founder negotiates alone, under pressure from his own departure date. It is the worst possible position.

Four points go into the shareholders' agreement at signing:

• the timeline of your withdrawal, from management first, then from the shareholding;
• what happens to your remaining shares: a buy-back by the successor, the holding company or the fund, with a written pricing method;
• the drag-along conditions, especially with a closed-end fund;
• the role of the managers who will take over: equity stake, entry timeline, any vendor loan.

A written pricing method is worth more than a price. A multiple of normalised EBITDA, an independent valuation, an average of two methods: it does not matter much, as long as the formula exists before the stakes turn personal.

The four years then split up fairly naturally. Year one installs the fund and names the successor. The next two bring that person up to speed, with real delegation. The last one carries out what is written. If the last year is spent negotiating, the first was badly used.

The drag-along, the friction point with a closed-end fund

A drag-along lets one shareholder force the others to sell when a buyer wants 100% of the company. What it costs you: you can be forced to sell at a time and a price you did not choose.

In percentages, it works like this. After an OBO, you keep 60% through your holding company and the fund holds 40%. If the drag-along is triggered from 50% of the capital, the fund cannot activate it alone. If the agreement lets it act alone after five years when no other exit has been found, your 60% follows its 40%. These are illustrative figures, but that is exactly how the mechanism works.

Three protections are negotiable: a high threshold, a floor price or minimum multiple of the fund's investment, and a waiting period before activation. Our guide to exit clauses goes through them in detail.

What becomes of the company after you leave?

It follows the scenario you wrote, or the one set by the most impatient shareholder. Three outcomes come up again and again:

In a succession, the good leaver clause matters too. Retiring on the planned date is usually listed as a good leaver case: your shares are then bought back at market value, using the agreed method. Check that your departure date is written into it.

The tax treatment of your capital gain and of the flows between holding and operating company depends on your file. Have the structure checked by your accountant and your lawyer before you sign, not after.

My verdict, profile by profile

Our ranking of SME funds shows the horizon each player publishes. Several do not publish one. Ask the question at the first meeting, and write down the answer.