Succession planning in a company is a complex process. It is often delayed and then requires external support. Those who deal with succession at an early stage increase their room for maneuvering and have an advantage.

Succession planning is one of the most central strategic tasks for every entrepreneur. Many owners even deal with the issue of succession twice at short intervals: once as the party taking over and once as the party handing over. A survey of more than 150 entrepreneurs conducted by Credit Suisse in collaboration with the Center for Family Business at the University of St. Gallen revealed that two-thirds of entrepreneurs who have been involved in a succession within the last ten years have already thought about their own succession and 15% have already formally arranged it.

Saying goodbye to one's own company is not easy for many, as the company often represents a life's work. The survey results, summarized in the study "Corporate Succession in Practice", also bear witness to this: In 80% of the company transfers carried out over the last ten years, the predecessor's retirement was due to health or age, which is why the handover of the company is usually delayed until the very end.

Handover to close persons is a difficult farewell

Based on the survey results, it was possible to identify two types of succession sequences in the handover or takeover of management and ownership: First, a gradual handover in which management and ownership are handed over simultaneously and all at once. Second, a gradual handover of the two batches. While the staggered handover takes an average of around six years from the subsequent party's entry into the company to the completed succession process, the gradual handover takes an average of 14 years, more than twice as long. In terms of satisfaction with the process expressed by the managing directors taking over after the handover, no significant difference can be found between the staggered handover and the gradual handover.

Switzerland's corporate landscape is strongly characterized by family businesses

Since the business landscape in Switzerland is strongly characterized by family businesses, a family-internal solution was used in more than half of the completed company transfers, with a handover to employees being the second most common solution. For the departing manager, handing over to close associates offers the decisive advantage that they are familiar with the predecessor's vision of the future. In this respect, it is hardly surprising that the choice often falls on intrinsically motivated successors: According to the survey, the successors are primarily characterized by a belief in the success of the business idea or a bond with the company and the employees. Meanwhile, social recognition plays a subordinate role for the successors in the takeover decision. Such intrinsic attributes are also in the interest of the transferring party, who wants to pass the company on in good hands. However, conflicts are not uncommon during the handover, says Marie Klein, doctoral student and research associate at CFB-HSG. In the survey, as many as 27% of entrepreneurs said that they had experienced moments of conflict during the handover process.

Experts are needed for some areas of expertise

In the context of business succession, various topics are also addressed for which the necessary expertise is often not available within the company itself, or for which there is simply not enough time to deal with, which is why external help is needed. According to the survey, around three quarters of the entrepreneurs surveyed see a certain to very high need for help with tax issues, for example. They also like to rely on external advice when it comes to strategically preparing the company for the handover and when it comes to financial issues: around 40% in each case see a certain or very high need for support here. "Timely and thorough financial planning increases the scope for action for the retiring managing director, for example to tap optimization potential in pension provision without at the same time burdening the company's finances in the short term," says Prof. Dr. Thomas Zellweger, Director of CFB-HSG. And he adds: "External help can play an important role in structuring and reducing the complexity of the succession issue. "

Be prepared for the unexpected

Often, the preferred succession option cannot be realized. Entrepreneurs should prepare for such cases by examining various succession options. One alternative worth considering is the company exchange. "Although the entrepreneurs surveyed are still skeptical about the company exchange, the route via such a platform also offers advantages," says Pascal Zumbühl, an economist at Credit Suisse. "It increases visibility, as you come into contact with a larger potential buyer base via a company exchange."

In addition, unforeseen events can influence the timing or design of the handover. The changes in the economic environment in the wake of the corona pandemic prompted some entrepreneurs to bring forward their own business handover: 6% of cases reported this. But a stroke of fate or pressure from competitors in one's own family or business partners can also unexpectedly accelerate the succession process. "Those who set the course for a smooth handover at an early stage and deal with the emotional topic years before the actual handover are at an advantage," says Alexandra Bertschi.