Succession planning
- the sooner, the better!

What happens when the company boss leaves? It is not only family-run companies that find it difficult to strategically approach the handover of the senior management team. However, it is extremely important to address the issue in good time. After all, an unregulated succession plan almost always leads to turbulence – and can threaten the company’s existence.

Every year, around 80,000 companies in Germany have to deal with a succession plan for reasons of age. Frighteningly often, the process is very bumpy. Family-run companies in particular find this difficult. However, it is not at all uncommon for a previously healthy company to find itself in an existential crisis as a result. In my opinion, this is also due to the fact that the strategically regulated handover to a successor is still seen as a taboo. There are many reasons for this. “Five more years is probably enough!”, “Nobody knows the company as well as I do.” Such statements are not uncommon in family businesses. Perhaps understandably so. After all, who wants to think about their own retirement? Especially if you founded the company and have had a significant influence on its success to date. “Is there even a successor who can do it as well as me?”

Succession planning takes time

Despite all the understandable arguments, I recommend that after the 55th birthday at the latest, company management should put this unpleasant topic on their own agenda and think about a strategy for succession planning. After all, a successful handover process takes time. In my experience, three to five years is not unusual – depending on how large and complex the company is. And that doesn’t even include the preparation time. After all, it is about much more than finding a person to continue the life’s work. Ideally, the potential successor must enjoy the goodwill of the entire management team. This means that the selection process must be transparent and based on a broad foundation, possibly involving a great deal of persuasion. Familiarizing the successor with all internal processes does not happen overnight either. Particularly in the case of a family business transfer, it is important to identify inheritance tax challenges at an early stage in order to ensure that the transfer is as financially sound as possible.

[quote]

An emotional aspect that should not be underestimated also takes time: letting go is not easy. For the majority of entrepreneurs, the most desirable form of succession is to pass on their life’s work to their own offspring. But even then, it is difficult to relinquish the usual responsibility and give the next generation the freedom to further develop the existing business. This also speaks in favor of developing a handover strategy as early as possible and thus enabling a smooth transition without frictional losses.

Threatened life’s work

And there is one more thing I would like to point out: If provision is not made, accident, illness or death can suddenly plunge even a previously healthy company into an existential crisis and destroy a life’s work. The case of Karl-Erivan Haub is just one example of many: The head of the Tengelmann Group disappeared without a trace in April 2018 while on a ski tour in the Alps. The company patriarch had not clearly arranged his succession. A multi-year dispute broke out between the various branches of the family. At one point, there was even talk of breaking up the group of companies. The lesson to be learned: even and especially in such exceptional situations, the remaining management team should not rush to install new management. In many cases, it makes more sense to look for an interim solution to bridge this vacancy. In other words: interim management. With our extensive experience, we at conzima have already enabled numerous companies from a wide range of industries to operate smoothly during this phase. Our know-how has ensured that all planned plans and projects can be implemented.