Chairman of the supervisory board Otto Steiner explained there had been lengthy discussions between himself, club president Dieter Schneider and chief investors Hamada Iraki and Hasan Ismaik through the night.
"We were able to find a compromise which was voted for unanimously by the supervisory board," said Schneider. "We've agreed that Sven-Göran Eriksson will join our coaching staff, but Alexander Schmidt will remain as head coach."
How the work will be split between Eriksson and Schmidt remains to be seen, but Schneider insisted the club's three-year plan would be further adhered to, with the compromise ensuring there would be no financial obstacles.
Chief executive Robert Schäfer added his endorsement to the deal, saying: "[Eriksson] is a world-class coach. We need to try to make the most of his rich experience."