The transfer of family businesses involves the transfer of ownership and management to the next generation for personal reasons. If you are an entrepreneur thinking about selling your life's work, you should first clarify what is important to you. A genuine family office that invests for the long term with family equity is the right type of buyer if the continued existence of the company, the safeguarding of employees and customers and a fair price are important to you .
A long-term family office like FORUM offers a sustainable solution for the succession of your family business. Thanks to their long-term perspective and understanding of family values, they can
ensure the continued existence and further development of the company. FORUM Family Office supports family businesses not only financially, but also strategically to ensure a successful handover to the next generation.
A professional succession plan consists of two transactions: In the first - and superficial - transaction, you sell a stream of future cash flows to a buyer at a valuation factor; in return, you receive an amount of money. In the second deal, you buy in: the partner who will manage your family business in the future and who will decide its future and that of your employees. Many entrepreneurs "forget" this part of succession planning. FORUM is your best partner if you are looking for a balanced package: the best possible "good home" for your family business and a fair purchase price.
Groups buy in order to integrate. In your case, the focus is on synergies.
After the takeover, central functions and processes of the group are transferred to your company, which means that decisions are made more slowly. After some time, it is completely unclear whether responsibility lies "above or below" and many good employees leave the company in frustration.
After a few years, your family business is then completely integrated into the group.
Family offices like FORUM buy companies to preserve and increase a family's wealth for the next generation. Most family offices do not sell at all. This gives your life's work a safe haven.
Family offices think long-term, so they invest to secure the future, i.e., employees, innovations and sustainability.
And they mostly operate on handshake quality - based on old merchant virtues.
Private equity funds are constructed as funds with a limited term and therefore have to turn over their investments every 3 - 5 years: They buy to sell more expensive - preferably with a lot of debt.
In this respect, your family business is prepared for sale from the moment of purchase: Cost reductions and renouncing invest with long payback are typical developments. The financiers become dominant in the corporate culture.
The family offices we are talking about here have a single family behind them - which is why they are also referred to as "single family offices". There are also "non-genuine family offices", e.g.
a) asset managers who manage the assets of many clients or families. In these constellations, liquidation of the investment is almost always pre-programmed in a few years.
b) Private equity funds that have families as investors. They are private equity funds - with all the characteristics we have described above. Investment bankers are in charge - like the gentleman on the right.
When selling a family business, choosing the right buyer is crucial. Private equity companies can achieve short-term gains through cost efficiency and restructuring, which can be advantageous in certain situations. Family equity , on the other hand, offers a sustainable alternative. Family offices, which manage the capital of a wealthy family (hence family equity), have a strong interest in the long-term development and stability of the company. They usually do not follow a strict exit plan and invest continuously in innovation and employee development. This long-term orientation promotes the corporate culture and ensures the sustainable competitiveness of the company. Family equity supports the long-term goals and values of family businesses and ensures a harmonious and successful future.
In Germany, around 91% of all private companies are family businesses. There are around 3.6 million of them, in which 57% of all employees work and which generate 55% of sales in Germany. Family businesses are the backbone of the German economy.
Problems with succession in family businesses often arise due to a lack of communication, delayed planning, the role dilemma, a lack of organizational development and unpleasant decisions. Other challenges include insufficient information for the workforce, a lack of career plans for successors, too strong a focus on tax optimization, cultural conflicts during the transition phase and insufficient consideration of individual company constellations. Early, strategic planning can overcome these difficulties.
The top 500 family businesses (by number of employees) performed more than 8 times better than the DAX-26 between 2011 and 2020.
As part of the study on inheritance tax 2023, it was analyzed whether a transfer of companies or shares is planned in the next three years as part of the succession. This is the case for 43% of the companies surveyed. A detailed analysis by economic sector shows that 48% of companies, particularly in the other services sector, are planning a succession plan. In other sectors, this figure is uniformly around 41% to 42%.
Looking at company size, it is clear that larger companies with more than 250 employees are particularly likely to plan a succession in the next three years, namely 50%. The proportion of companies with 10 to 49 employees is also above average at 44%. 38% of companies with 50 to 250 employees and 29% of smaller companies with fewer than ten employees are planning a succession plan.
In recent decades, family office buy-outs have become increasingly important in Germany. This form of company acquisition, in which wealthy families or their asset management firms take over companies completely, offers an attractive alternative to traditional private equity deals. Family offices often have a long-term focus and bring not only financial resources but also entrepreneurial experience and strategic know-how to the companies. This enables sustainable development and stability, which is particularly valued in times of economic uncertainty. In addition, the acquired companies benefit from the more flexible and individual support that family offices can offer compared to larger institutional investors. In view of the upcoming generational changes in many medium-sized companies, family office buy-outs are expected to play an even more central role in the German economy in the coming years.
In order to better understand the succession situation, it is important to know what positions the family members hold in the companies. The shareholder data analyzed in the Family Business Foundation's Company Monitor shows that an average of three family members have been co-owners of the company since 2018. The highest figure was reached in 2018 with just under four family members as shareholders. In the following years, this figure stabilized at an average of three participating family members. In 2023, the majority of companies have one to two family members as owners (68%). A further 13% of companies have three family members as owners, and 19% of companies have four or more family members involved.
Alternatives to family succession in family businesses include various options. A management buy-in (MBI) enables external managers to take over and manage the company. In a management buy-out (MBO), the existing management buys the company. A sale to external buyers, such as competitors or strategic investors, is another option. Companies can also raise capital through an initial public offering (IPO) and have their shares traded publicly. A foundation solution ensures that the company is continued independently of family succession arrangements. Finally, financial investors, such as private equity companies, can acquire shares in order to increase the value of the company.
The handover of family businesses involves the transfer of ownership and management to the next generation for personal reasons. This process significantly differentiates family businesses from non-family businesses. As family businesses often work across generations, the issue of succession is unavoidable for them. In Germany, the situation will become even more acute in the coming years due to demographic trends. In addition, it is expected that educational and career paths will be increasingly shaped by individual interests, meaning that fewer successors will come from within the family business. In view of the fact that the majority of German companies are family-run, many of these businesses face the challenge of finding a suitable successor. The following analysis offers insights into the succession situation of German family businesses and highlights the relevant influencing factors.