A man with a blindfold wanders through a room full of question marks

Company handover: more risk than opportunity?

Under the title "after the handover: I'm off then", PwC AG and INTES Akademie für Familienunternehmen (INTES Academy for Family Businesses) have produced a study on the challenges and perceptions of handing over a business.

On the one hand, the study shows that many transferors take care of the transfer of the company responsibly and in good time. At the same time, however, it shows that just as many companies experience difficulties in the course of the transfer. A look at the individual aspects also shows that these difficulties are homemade and therefore avoidable.

One in three entrepreneurs is not looking forward to handing over the business

53% of the entrepreneurs are looking forward to retirement because they already have many ideas about it. However, this contrasts with 20 percent who are definitely not looking forward to it and 42 percent who are still undecided. What does this mean for the approach to the business handover process?

The KERN partners, who specialise in supporting business succession, have a clear opinion on this: "Entrepreneurs who do not have a future topic for which they are really passionate will delay business succession and will not be happy in retirement.

This becomes clear in the study when asked about the reasons for withdrawing from the company. Here, the desire for more free time is relevant for only 2 out of 5 entrepreneurs. From Wolters' point of view, the entrepreneur lacks a clear goal that he wants to achieve through the handover.

50 percent of entrepreneurs find it difficult to part with their business

It is therefore no wonder that 37 percent of entrepreneurs find it difficult to part with the company. At the same time, another 40 percent are undecided whether they can part with the company easily or with difficulty. This is especially the case with the founders of the companies as well as with older entrepreneurs.

What follows is that in the companies studied, 30 percent of the transferors were older than 70 at the time they had the company.

Work must continue, but for how long?

86 percent of entrepreneurs say they do not want to have to work to finance their retirement. Nevertheless, 40 per cent of entrepreneurs definitely want to stay in work afterwards. In addition, 37 percent have not yet decided. The proportion of those who want to continue working in the company is higher the longer they have worked in the company.

Unfortunately, 31 per cent of the companies that continue to work do not plan a fixed exit date. Practice shows that this harbours a great potential for conflict. It is therefore advisable to have a fixed date, although this can be optionally extended if there is mutual interest. This gives both sides clarity and security.

The fact that 85 per cent of the entrepreneurs prefer to continue to offer their services in their own company is an obvious choice. But here, too, the role reversal can lead to a conflict that can only be avoided through joint agreements and rules, if necessary with the help of a moderator.

Their own children as successors?

75 % of entrepreneurs would like their own children to be the successor. However, only in 2 out of 3 cases will the business handover work out within the own family. The next generation is increasingly critical of the decision to take over the family business. They contrast the prospect of working in the family business with the option of being a secure employee. Even today, less than 50 percent of businesses are transferred within the family - and the trend is rising. It will therefore increasingly be the task of entrepreneurs to find and train a suitable successor in good time, either within the company or from outside.

Conclusion:

The study shows that the majority of family businesses approach the task of business succession responsibly. At the same time, transferors encounter difficulties above all when they have a very high emotional attachment (through founding and many years of activity) to the company and have not worked out a sufficiently clear perspective and new exciting and challenging goals for the time after the transfer. Working this out is one of the really exciting and challenging activities when accompanying a company in handover!

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