Sooner or later, not only family-owned enterprises are confronted with the challenges of business succession. As media reports have shown, the subject can also become relevant to large corporations, such as in the case of IKEA: According to initial reports, the overall responsibility for the company, once established by its founder Ingvar Kamprad, was to be handed over to Kamprad’s three sons. The rebuttal soon followed; “As a senior consultant, Kamprad is still involved in making important decisions” states IKEA-Speaker, Ylva Magnusson.
Although the business succession challenge particularly confronts family-owned business, the example of the IKEA-Corporation makes obvious that many entrepreneurs are incapable of detaching themselves from their positions within the company.
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This is very logical as many entrepreneurial personalities have invested the greater part of their life’s work in their company. Although, in one way or another, the matter is present, explicit measures concerning active successor searches as well as determining the related qualifications of a suitable successor are often neglected; particularly a relevant planning process in reference to long-term intentionally planned business transfer preparations appear in need of improvement.
During the parental generation’s retreat, various factors play an immense role for the successful continued existence of the family-owned enterprise. The imminent change process is typically connected with emotional denial, irritations within and outside the company as well as economical risks. Therefore, the transfer process should be prearranged in a manner that leads to restructuring in three subsystems; the entrepreneurial family, partners and company, who will then stand up to the future challenges.
Successful Business Succession
A clear communication process taking place between parents and the succeeding generation as well as a regular evaluation thereof, is essential for successful implementation of a business succession. The owners should be united and act concomitantly; a mutual family constitution and corporate governance should exist and company objectives and strategies should be concisely expressed and upheld by all company managers.
A clear legal succession ensures that unnecessary uncertainties are avoided. This difficult situation can often be positively influenced, when the following generation is capable of honoring its parents’ life’s work. The possibility of failure is significantly reduced with a well-planned transfer process.
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SEDLÁK & PARTNER advises and supports you during business successions and transfer processes. We have years of experience, based on diverse solutions for various types of organizations and suitable for different industries.Do you want to learn more about the topic? Please fill out the following contact form to receive further information or schedule a free, personal online dialog to see our references and practical examples of our current projects.