Succession in family businesses: why ownership and management are two different questions

This article summarises the first part of a talk by Prof. Dr. Tom Rüsen, recorded at the 85th forum of the WIFU Foundation. You can watch the full video (in German) here: Nachfolge in Familienunternehmen, Part I of III. The take on smaller businesses is our own.

More than handing over shares

Roughly every 25 to 35 years, every family business faces a succession, says Rüsen. It is not just a few shares or a managing director role that change hands. Suddenly the child may be in charge, not the parents. Familiar family roles start to shift. That makes succession a turning point on several levels at once.

Why the decision keeps getting postponed

Rüsen describes a typical pattern. In your mid-50s it is clear there is still time. In your late 50s something is still missing. After that, letting go gets harder and harder. He points to the regular KfW Research surveys, in which many owners keep pushing their handover further back. At its core this is often about letting go. More on that in Planning succession calmly.

Family first, outside buyers catching up

Handing over within the family is still the most common wish. External successors are the second largest group. Rüsen explicitly mentions Entrepreneurship Through Acquisition (ETA): entrepreneurial young people who take over an established business instead of starting one. He sees it as an exciting alternative worth supporting. That is exactly where Nachfounder comes in. Read more in Founding by acquisition and on our page for successors.

Where successions really fail

There is no checklist that guarantees success. Tax, company law and structure can be sorted out. The relationship between father and son, between siblings or between uncle and niece cannot. What helps is a way of talking to each other that has to be learned and practised.

Families in the first to third generation often lack that experience. Family businesses in their fifth or sixth generation have usually developed their own rules to guide them. That is why the risk is particularly high in younger family businesses.

Succession in ownership or in management?

Two questions are often mixed up: who gets the shares, and who runs the business? Rüsen observes that fewer people are willing to step into an operational role than 20 or 30 years ago. That raises new questions:

• Does whoever inherits shares also have to join management?
• Should the sister get less because the brother steps into the business?
• Is the business an inheritance or a responsibility?

According to Rüsen there is no right or wrong. Every family has to find its own stance. That is why there are so many different succession models.

Succession is a series of decisions

It is not about one single date but about many steps over years:

• How do we prepare potential successors, daughters as much as sons?
• When do children become shareholders?
• When does building skills start, rather than in their late 20s on the advisory board?
• How do family members learn to decide as a team before they lead together?

What this means for you

As an owner: start early, even if it feels too early. And separate the question of wealth from the question of who should lead. As a successor: do not just ask about the numbers, ask how the family lets go and who will have a say in future.

We prepare both sides, and the business for the new person. A good first step is the succession check.