Generation change without advisors

Genera­ti­on change without advisors - a practi­cal report

Learnings from a genera­ti­on change without exter­nal support ? a practi­cal report. 

A business hando­ver ? regard­less of whether it is a sale of the business or a genera­tio­nal change within the family ? is always a highly indivi­du­al path. Some experi­en­ced entre­pre­neurs are convin­ced that such a project can be carri­ed out by themsel­ves without any problems. However, it often turns out that exter­nal support is helpful and useful in such a process.

Only recent­ly, we were called in by an owner-managed family business, as some problems arose during the hando­ver process. Our task is to work through the problem areas that arose during the hando­ver process, which was carri­ed out “under our own direc­tion”, and to find a future-orien­ted solution.

The genera­tio­nal change - the initi­al situation

When the managing partner celebra­ted his 55th birth­day, he told the almost 250 employees that his child­ren would take over the compa­ny after his retire­ment. He had founded the compa­ny more than 25 years ago and the conti­nua­tion of the business was a very important motiva­ti­on for him in his further entre­pre­neu­ri­al activi­ties. The owner was there­fo­re aware of this very early on. Both child­ren had joined their parents’ compa­ny after their school and univer­si­ty educa­ti­on and immedia­te­ly took up manage­ment positi­ons there.

The years passed and the owner reali­sed that due to the size of the compa­ny, not all tasks could be carri­ed out by the manage­ment alone, but that the manage­ment team had to be broaden­ed. Thus, without further ado, a second manage­ment level was estab­lished, which formal­ly created clear manage­ment and respon­si­bi­li­ty struc­tures (sales, techno­lo­gy and commer­cial management).

Every year, at various staff events, the owner repea­ted­ly pointed out that the child­ren would take over. However, nothing was noticeable opera­tio­nal­ly. The child­ren remain­ed unchan­ged in their areas of activi­ty. Formal­ly, one of the child­ren was instal­led as an additio­nal managing direc­tor, the second child was appoin­ted as an indivi­du­al autho­ri­sed signa­to­ry. Thus, the formal steps were taken, but nothing had changed in terms of content: issues to be decided were always submit­ted to the ’senior boss’, even if they could have been decided by the succes­sor. Perhaps the child­ren or the employees of the newly estab­lished manage­ment level were quite comfor­ta­ble not having to make decis­i­ons themsel­ves; they did not demand this respon­si­bi­li­ty either. And the owner was not uncom­for­ta­ble, he contin­ued to act as owner and manager as if there had been no changes.

8 years later…

After about 8 years after the first published “succes­si­on plan”, the managing partner retired at the age of 63. He had resigned as managing direc­tor - the one child was now sole managing direc­tor. The ’senior’, however, remain­ed in the role of owner and contin­ued to come to the office every day. He was unchan­ged in his old role as managing direc­tor and lived it out every day.

As this constel­la­ti­on contin­ued, there was incre­asing discom­fort, especi­al­ly from the two child­ren, which led to an incre­asing­ly conflic­tu­al environ­ment. After another 2 years, we were called in to work through the situation.

What questi­ons do you ask yours­elf when you read the brief account above?

A few points - and these are only examp­les - stand out here: 

Deal with the complex project “genera­ti­on change” in good time and take plenty of time!

As mentio­ned in the examp­le, the trans­fer­or was well aware of the fact that the compa­ny would be handed over in the future. However, the topic is far from being concluded with a “verbal announce­ment” alone! Be clear about what it means for you as the trans­fer­or when the compa­ny and thus your respon­si­bi­li­ty is handed over! What do you want to do after­wards? What does your life plan look like then?

Make sure that the child­ren can gain suffi­ci­ent experi­ence in a profes­sio­nal context!

As parents, we always try to make many things possi­ble for our child­ren. In the examp­le given above, this was also the case, the child­ren were able to comple­te compre­hen­si­ve educa­ti­ons at renow­ned univer­si­ties. What did not happen, however, was that the child­ren were also able to gain practi­ce outside their parents’ compa­ny. So let your child­ren learn entre­pre­neur­ship in a ?foreign univer­se? learn entre­pre­neur­ship! Unfort­u­na­te­ly, it is no longer known what the origi­nal inten­ti­on was for this decis­i­on. In retro­s­pect, however, the owner told me in confi­dence that he would do this differ­ent­ly in the future.

Make yours­elf dispensable as a trans­fer­or in good time!

As part of a hando­ver process, it is important that you as the hando­ver partner ensure that the compa­ny is not depen­dent on you! This may someti­mes be a painful reali­sa­ti­on ? but your compa­ny must also function without you! In this case, the owner recog­nis­ed this fact: he estab­lished a second manage­ment level with clear respon­si­bi­li­ties from experi­en­ced employees. But: such a reorga­ni­sa­ti­on only makes sense if you grant the employees ? and in this case also the two child­ren ? the corre­spon­ding compe­ten­ces and do not conti­nue to make decis­i­ons yours­elf! And if the staff come to you and want advice: delega­te the task back again, they should also make decis­i­ons themsel­ves and learn to deal with the conse­quen­ces. Giving advice then makes perfect sense! This brings us to the next consequence:

Ensure clear respon­si­bi­li­ties and allow them to be taken on!

Even if it is very diffi­cult for you: it is allowed that your succes­sors or, as in this case, also the second manage­ment level make mista­kes themsel­ves! Every employee, whether a compa­ny employee or a family member, can learn from their own mista­kes and grow through them.

In additi­on, many other topics can be mentio­ned, which can well be cited for possi­ble hurdles in this example.

You want to know how the matter turned out?

After about 5 years, after the owner has retired as managing direc­tor, the succes­sors have ‘fought’ for their areas of respon­si­bi­li­ty in a thorough­ly conflic­tu­al environ­ment; the former managing direc­tor is still the owner, but is hardly present in the day-to-day business anymore.

A struc­tu­red compa­ny succes­si­on with profes­sio­nal support could have saved many an ‘emotio­nal’ detour. diver­si­ons could have been avoided: There­fo­re: get support, a genera­ti­on change is anything but a simple project!

Image: canva.com

TIPS for further reading: 

Selling a compa­ny - 5 measu­res to make your compa­ny fit for sale

The compa­ny hando­ver - when is the right time?

Talking helps! - Also for business succession!

Costs of a business succes­si­on or an M&A project