The generation change without advisors - here is a practical example
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!


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