Many family-owned businesses grapple with the issue of succession. This question is becoming increasingly urgent not only in the Netherlands but also elsewhere. For instance, in the US, 23% of companies are led by CEO’s/owners of over the age of 65. In Germany, more than a third of businesses are run by CEO’s/owners of aged 60 or older; that's three times as many as two decades ago. And only one in ten is younger than 40. In Japan, around 2.5 million small and medium-sized enterprises will be led by CEO’s/owners of over 70 years old next year.
In the US, a variant of private equity firms emerged in the mid-1980s, known as search funds. MBA graduates with third-party funding acquire small or medium-sized enterprises from CEO’s/owners facing succession issues. And they often turn them into successful ventures. The Economist published an interesting article on this earlier this year titled "How to succeed with no successor."
But there's also an appealing alternative to selling the family business.
In my practice, I see good examples of families successfully transferring leadership, not ownership, of the enterprise to outsiders. This includes leadership in terms of both management, shareholders boards, supervisory boards, and executive leadership. By doing so, they retain control of the wealth within the family. At the same time, they bring aboard excellent individuals to ensure the future of the enterprise remains in good hands for generations to come.
Not in the least because it's far from certain that the wealth released through a sale will perform equally or better elsewhere. Certainly, not every family easily replicates the success achieved, for example, by the Van der Vorm family with HAL.
You're welcome to exchange thoughts on succession within the family business. This includes discussions on how governance can be structured, the role of the family charter, and how suitable candidates can be identified and appointed to various positions.
Warm regards,
Aegeus