Generational Transition of Family Businesses and Groups: A Rite of Passage That Brings Challenges and Opportunities

Photo d'Anna

Herbert Castéran introduced this conference on business handovers, transposed to family businesses, the first of a cycle initiated jointly with the Alsace Chamber of Trades and Crafts, and the Alsace Attractiveness Agency, co-hosted by Patrice Charlier, head of the “Business Transfer” Chair at EM Strasbourg, and Christine Greiner, founding partner of C_Suites Conseil, a consultancy firm that helps decision-makers. And to discuss this sensitive topic, two emblematic family business leaders from the region also appeared: Michel Haag, President of Météor, and Pierre Schmittheisler, President of SERMES.

 

Preparing Your Departure

Patrice Charlier opened the conference by recalling that the share of business transfers within families is only 12% in France, compared to 65% in Germany and 76% in Italy! A company is considered to be a family business when it has been owned by the same family for at least two generations. Although managing them may seem easier, because it is done “in the family”, the delicate, and sometimes painful, question of succession, which is often poorly or inadequately prepared, arises. The process includes the transfer of ownership and management but also, and above all, a strong emotional dimension for the transferor, the transferee, and family members.

Nicolas Mougin (Chamber of Trades and Crafts), points out that within trades in Alsace, between 25 and 35% of company directors are over 55 years old, which means that more than 8,000 companies which will be the subject of a transfer in the medium term. Figures from the BODACC (Official Bulletin of Civil and Commercial Announcements) indicate that the survival rate of a company that has been taken over is 88% after five years, whereas one out of two companies does not survive the three-year mark after it has first been set up. A comparison of these two figures shows why the Chamber of Trades is involved in handovers.

Although a succession plan is often anticipated, thought out, and generally put in place over several years as the head of the company approaches retirement age, as Christine Greiner explains, it sometimes has to be organized in a hurry, when the company director dies, for example.

This was the case for Pierre Schmittheisler, who was propelled to the head of the SERMES company at barely 24 years of age following the untimely death of his father. A situation that he does not want his loved ones to go through; this is why he is already preparing for his future departure, having even sold 75% of his shares to his children. At the age of 62, Pierre Schmittheisler says he has been in the succession process for two years now. He plans to leave his position completely to his children in the next ten years, to enjoy a well-deserved retirement. Two of his sons are already employed by the family business.

Michel Haag presides over Météor, “an independent Alsatian brewery that intends to remain so”, which he has long managed alongside his charismatic wife Yolande, who is also very involved in the company. In this brewery, which has thrived for almost 380 years, there is a real family spirit, even among the employees, whose families have sometimes also been working in the company for several generations. Having just celebrated his 50th anniversary, Michel Haag is about to pass the torch to Edouard, the youngest of his four children, who already holds the position of Managing and Commercial Director. For Michel Haag, in the case of a family transfer, three crucial criteria must be respected: the transferee must be willing to take over the company, but they must also have the necessary skills to manage it. Finally, the transferor must ensure that they are not giving their successor a poisoned chalice. In other words, they must pass on a healthy and sustainable business.

Sensitive Spheres and Unavoidable Steps

These criteria have been enthusiastically affirmed by Christine Greiner, who cites the pitfalls to be avoided for a successful handover.

To begin with, the consultancy specialist focuses on the three spheres involved in such a process: the family, of course, but also the company, and the shareholders. Three spheres that must be taken into account, listened to, and preserved as best as possible throughout this transitional phase. For a successful succession, the transferor must be attentive, active, and involved, while gradually agreeing to leave their role as decision-maker to their replacement.

Christine Greiner also offers two basic pieces of advice: anticipation and rationalization. The process takes between five and ten years in the case of a handover, whereas a ‘traditional’ transfer only takes two to three years. “The passage of time closes doors”, she noted, and “the more we act upstream, the more the game is totally open”, making it possible to consider the different solutions available to us. “Anticipating does not mean that we designate ten years in advance the person who is going to take over, but simply that we start on a trajectory”, which will enable this process to be carried out successfully. As for rationalization, it is a very important part of transmission, as we must avoid letting emotion take over.

Preserving the Company's Values

All the speakers agree on this vision of the steps to be followed. As for change, which can frighten transferors, it is also necessary for the company's survival. Once again, everyone agrees that change and innovation are inherent in a company’s evolution, and even guarantee its good health. Over the generations, although Pierre Schmittheisler and Michel Haag have seen their companies change, it was to better adapt to a world in constant motion. The most important thing, they both say, is to know how to preserve the company's founding values at all costs.
 
For more information:
 

Cycle of conferences: Handover - takeover of companies
 

  • Thursday, December 12 in Mulhouse (SIM) at 6:00 p.m. - The process of negotiating the external transfer / takeover: inventing a solution (for transferees)
  • Thursday, February 6 at EM Strasbourg at 6:00 p.m. - Business takeovers: another way to go towards entrepreneurship (for the general public, students, business owners, and creators)
  • Thursday, April 9 at 12:00 p.m. in Colmar (Château Kiener) - Conference lunch: Valuing a company (for transferors)
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