Handing over your company to the next generation – it’s no easy task. The AöL has compiled a guide to how this can be achieved successfully.
With many, in some cases very personal, reports and assessments, it traces how business and idealistic responsibility was transferred to successors. The focus is placed explicitly on the protagonists who manage the companies today.
Foundations secure ideals
Corporate law considerations such as the conversion into foundations do not play a major role in the guide. Many medium-sized family businesses have chosen this option in the past. It is also popular in the organic sector, not least because it allows the purpose of the company to be preserved, provided that it is clearly formulated in the mission statement. This was the reason why, among others, Götz Rehn, founder of Alnatura, decided to establish a foundation. This is similar to the Voelkel natural food juice factory (Naturkostsafterei Voelkel) which, through the foundation, aligns all the company’s activities with the conceptual values of the founding idea.
Family foundations as holding companies have another advantage: they guarantee the pension of the founders and their families. In this respect, the influence on the (possibly non-family management) can be secured by setting up a foundation advisory board: “In so doing, the founder has far-reaching possibilities for shaping the powers of individual organs of the foundation,” writes Klaus-Christian Knuffmann, partner of the KERN advisory group in an article on bdu.de.
Very often, the founders try to put the fate of the company in the hands of their children. This requires “a new quality in the parent-child relationship,” Alfred Huober warns in the AöL guideline: “It is important to consciously reflect on family interaction and, if necessary, to change it.” Which is not always easy, as Aaron Drosihn of Tofutown recalls: “Discussions in the company with the family quickly became private rather than remaining truly objective.”
External consulting makes sense
For this reason, according to AöL, it can be quite helpful in family contexts to use competent external consulting services: “This can take the form of business or tax advice or a lawyer’s office. Consultants or coaches can be very valuable in the various phases of the transfer process and should at best be involved from the beginning.” Sophie Schweisfurth from the Herrmannsdorfer Landwerkstätten confirms this recommendation. In the transition talks, an external moderator was initially sought. Later, the Institute for Philosophy and Leadership was brought on board “when the first conflicts arose and things got down to business.”
Knowledge of the business, the company, its employees and customers is central to the success of any succession plan, everyone agrees. A successor from within the company is already very familiar with the specifics of the company and can give employees a certain security because continuity is guaranteed. “In the end, the most important aspect was that I had already been working for the company for 10 years. Colleagues, processes, products – everything was already familiar to me. It also made things easier the other way round: Everyone in the company already knew me,” Liane Maxion sums up the assumption of management responsibility as a member of the board of Naturata AG.
Whatever solution is sought, it takes time: “Timely and systematic preparation for company succession is an essential prerequisite for the long-term survival of the business,” the AöL guideline states. “As a rule, this must be estimated at well over two years,” advisor Knuffmann specifies. The “Guide for the Succession by Young Organic Entrepreneurs” (Leitfaden zur Nachfolge junger Bio-Unternehmer) published by the Association of Organic Food Manufacturers (AöL) was developed in close cooperation with the University of Kassel – and should be compulsory reading for all those who want to hand over or take over companies.