Built from sweat, stalled by succession: What happens when Singapore's SMEs have no one to take over the helm
"For decades, Singapore's SMEs have had no real succession solution. Grants are not what they need. They need leadership to take over their business and steward it for the next generation," said Mr Dennis Chua, founder and CEO of Timah Partners, which acquires SMEs whose owners are ready to retire but have no succession plan.
The company, established this year, mainly acquires businesses valued at between S$10 million and S$50 million with annual operating profits of S$2 million to S$10 million, and then holds and operates them for the long term – installing a trained CEO from its succession programme to grow the business rather than restructure or flip it.
Mr Chua said that most SMEs just simply cannot find talent to become managers. In one case, Mr Chua reviewed a company's accounts and found that the highest-paid staff below the family members earned about S$6,500 a month, far less than what a manager capable of running the business or becoming CEO would expect.
As a small step towards addressing succession in SMEs, Mr Chua of Timah Partners started the CEO Succession Programme this year. It was made possible after Timah Partners secured US$50 million in external funding in June, backed by the founders of major US-based holding companies, including TransDigm, Danaher, and 3G Capital.
Singaporeans from leading Master of Business Administration (MBA) programmes in the United States and the United Kingdom, venture-backed startups, as well as public sector, military, finance, or consulting backgrounds, are recruited for the programme and immersed in the realities of running SMEs.
"It's like a hands-on MBA," said Mr Chua. "The recruits remain employees of Timah Partners, and over their careers, we expect them to run multiple businesses, rotating across companies within our portfolio."
The vision for the programme, he added, is to connect strong SMEs with talented young professionals, making SME management a sought-after career. "In 10 to 15 years, we want talent to think: 'I want to be an SME CEO.'"