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The Transferor

Updated: Nov 29, 2023

Company succession is something completely natural and something necessary within our lifetime. The dangers, which hardly anyone is aware of, lurk in three different corners: the transferor, the transferee, and the company.


Two hands showing protection


The 3 Dangers of Business Succession: Part I

The succession in a company, as simple as it may sound in the first step, is a highly complex process, since it is not a rigid object that is handed over, but a living organism. A company lives from its employees, customers, business partners, who are connected to each other through various networks of relationships, and from the creation of products or services. If the company has been handed over to a successor, nothing can be corrected. It is like it is.

In this situation, the transferor himself is confronted with a variety of challenges. Above all, the feasibility of a company handover, because this usually only happens once in the life of an entrepreneur and therefore there are no empirical values. In addition, a lot of emotions play a role here - probably the most important and unfortunately most neglected part of a handover. These range from fear (“Will I succeed in the handover?”), coupled with shame (“What am I supposed to do afterwards? I have always defined myself by my independence.”) to contempt (“I can’t handle the new person / transferee suffer. He can't do it as well as I."), to anger ("I feel disadvantaged! I wasn't given what I deserved!") and guilt ("I let my "baby" and my employees in the lurch!"). The latter in particular are rarely in the conscious of the transferor, i.e. they take place in the subconscious and can consequently sabotage a succession process.

In the German economy there are some prominent examples of failed company successions, such as Fischer Dübel, Knorr Bremse or Darboven.


EXAMPLES

Fischer Dübel messes up the company handover

The generation change at the Fischer group of companies did not work. In November 2011, Klaus Fischer said: "I have no problem letting go". At the time, the 61-year-old was the owner of the company, which is best known for its dowels. He handed over operational management to his son Jörg Klaus in the spring. But that's now (2012) over: Klaus Fischer has taken over the chairmanship of the company's management again with immediate effect.


Family dispute at Knorr- Bremse

In 1905, Georg Knorr founded Knorr-Bremse, the world's leading manufacturer of braking systems for rail and commercial vehicles. In 1989, Heinz Thiele, the longstanding member of the board, became the sole owner when the company's heirs sold their shares. Although the patriarch had already transferred more than half of the shares to his children Hendrik and Julia in the 1990s, he always retained the majority of votes. Shortly before his appointment to the board of directors, his son Hendrik left the management and later also as a shareholder in a dispute. The original succession plans thus burst.


Darboven

Albert Darboven has been running the traditional Hamburg coffee company of the same name since 1968. When he fell out with his son Arthur, to whom he had already given a majority stake, Arthur left the company in a dispute in 2009. The father then revoked the donation and thus became the majority shareholder again. The conflict flared up again in 2019 because the now 82-year-old Albert Darboven wanted to arrange his successor by adopting Andreas Jacobs, a scion of the former Jacobs coffee dynasty in Bremen. Arthur Darboven, who as the biological son and legal sole heir sees his skins swimming away, is up in arms against this move. The case remains exciting.


But these are just a few prominent examples of entrepreneurs or companies that are in the public eye. The number of unreported entrepreneurs who did not make it into the public media is likely to be many times larger!


Conclusion

It is advisable to discuss the conditions of the succession transparently since the resistance of the patriarchal head of the family to a transfer of power can impair the will of the following generation to take over. This not only has far-reaching consequences for the company itself (damage to reputation/image, poor working atmosphere, increased fluctuation rate, loss of trust from customers and suppliers, etc.), but may also lead to a (final) break within the family.


My advice

If you are the transferor: Let us accompany you professionally in the concrete implementation (during the handover process) of your succession. You will be confronted with situations and circumstances that you - despite all the well-intentioned preliminary considerations of other consultants - cannot even assess today. The discrepancy between how you perceive yourself and how others perceive you can lure you into a costly trap that you will find difficult to get out of.

Finally, you should ask yourself whether you really want to risk discrediting all your achievements and the reputation of your company because you have discredited yourself with your successor.

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