Intra-family business successions are becoming increasingly rare in the so-called DACH region. This is because most of their entrepreneurs’ children in Germany, Austria and Switzerland have no interest in continuing their parents’ business. Instead, the children are drawn to salaried employment. According to a study by the University of St. Gallen and the consulting firm EY, this trend is even more pronounced in Germany than elsewhere and has intensified in recent years.

Threatening entrepreneurial shortage ahead

Already last year, the Association of German Chambers of Industry and Commerce (DIHK) warned in a study of the impending Lack of entrepreneurs. Months ago, the Kreditanstalt für Wiederaufbau (KfW) also pointed out that the demographic development of the population is much faster than that of the population. Ageing of the entrepreneurial population in Germany. These results are further underlined by the current study. For example, only about four percent of German students whose parents own a family business want to become their parents’ successor within five years. In principle, only about nine percent of all entrepreneurial children can imagine succession within the family.

Austria and Switzerland face similar situation

The figures for Austria and Switzerland are very similar. In Austria, 3.4 percent of the children want to follow in their parents’ entrepreneurial footsteps within the next five years and 12.6% are basically aiming for family-internal business succession. In Switzerland, only 3.9 percent want to take over the parental business in the next five years and 10.4 percent in principle.

This puts the readiness of juniors for family-internal company succession at the lower end of the international comparison. Worldwide, 19.8 percent of all entrepreneurs’ children can imagine succeeding their parents. In terms of early commitment to succession, German-speaking entrepreneurs’ children are only slightly below the global average of around 5%. The study is based on a survey of 34,000 entrepreneurial children from 34 countries and was published for the second time.

Attractive alternatives to a generation change within the family

The big difference between the results of the DACH region and the rest of the world is likely to lie in the attractiveness of the labour markets, because where the economy is struggling to get off the ground, many entrepreneurial children are dependent on a job in their parents’ company. Thanks to the well-developing economic environment in Central Europe and the resulting shortage of skilled workers, a large proportion of juniors (around 60%) are initially focusing on a career in employment outside their parents’ company. However, many also want to try their hand at entrepreneurship and are working on founding their own company. For these juniors, the parental business is apparently not attractive enough to take over as part of a family-internal succession. This is because, fundamentally, the succession intentions of the younger generation have declined by around 30% worldwide in recent years.

Daughters assess family-internal company successions as more risky

According to the study, there are also differences between the two sexes. Regardless of the field of study, the culture and the birth order, daughters worldwide would have less desire to take on family-internal business successions. “It turns out that daughters consider an entrepreneurial career to be riskier than sons,” said Professor Thomas Zellweger of the University of St. Gallen of the Swiss Handelszeitung. “Moreover, sons are more convinced of their own entrepreneurial abilities than daughters.”

Good preparation is becoming increasingly important

Because the results of this study make it clear that it is of high importance for family businesses to prepare the generational change well. “From our experience, entrepreneurs should start dealing with their own business legacy for the first time from the age of 55”, recommends Ingo Clausa consultant at K.E.R.N - Die Nachfolgespezialisten who specialises in business succession. This is because only about one third of all family businesses succeed with succession within the family. Claus adds: “In a first step, the entrepreneur should therefore consider what he wants to hand over to whom and when. Then the entrepreneurial family faces the challenge of convincing the next generation of the opportunities and attractiveness of a family-internal succession.”

Please also read our Comment.