This page has an average rating of %r out of 5 stars based on a total of %t ratings
Reading Time 3 Minutes Reading Time 3 Minutes
Created on 12.11.2018

Succession planning – when is the right time?

Handing over a company to the next generation is a challenge. Organizing one’s own succession is a once-in-a-lifetime event.

Taking a back seat at work is usually quite difficult. Many entrepreneurs in Switzerland put succession planning on the back burner. Thinking corporate succession through carefully saves money and makes the process less stressful. But when is the right time to hand over the business? How do you identify suitable candidates to take over your company? And how do you plan the handover? These and other questions on succession planning are answered here.

Succession planning is a strategic task: start ten years before the handover takes place

A successful succession plan is strategically important. The main goal is to ensure the long-term success of the company. Experience, expertise and know-how should be retained. The company should also aim to keep hold of talent, customers and employees. A study by the analysis company Bisnode indicates that over 70,000 Swiss SMEs are currently facing a handover to the new generation. The owners (sole proprietorships), shareholders (companies) or BoD members (private limited companies) are aged 60 or over at these companies in Switzerland. They will soon have to decide on corporate succession.

Many SME owners nevertheless only plan their succession one to five years in advance. That is often too late. Experts recommend beginning succession planning when you reach the age of 55. Finding the right successor takes time, especially if nobody in the family can or wants to take over the company. 

Internal or external successor?

Owners have two options when it comes to selling their company.

  • Buy-out: The company is sold to the existing management or (long-serving) senior employees as part of a management buy-out.
  • Buy-in: When the owner transfers their company to a successor who does not work at the company, this is known as a management buy-in. In this scenario, the buyer may be a private individual, another company or an investor.

Marital property and inheritance law also has to be considered in the case of family companies. If there are several children, the company can either be transferred to the most capable offspring or to all offspring in equal shares. The decision on which of the offspring takes over the company ultimately depends on various factors – as well as capabilities, interest and life circumstances also play an important role. 

Planning the succession process at an early stage – this also concerns your personal retirement planning

Successful corporate succession can make restructuring or a change to a different corporate form necessary. This may also concern your personal retirement planning. That’s why it is so important not to leave it too late to tackle the succession process. Business owners should address the following issues at an early stage:

  • Current and future financial requirements
  • Withdrawal of company funds
  • Assessment of employee benefits
  • Pension and retirement planning
  • Tax optimization

A realistic The link will open in a new window evaluation of the company is an important part of decision-making. 

Objective evaluation

Planning corporate succession can be an emotional business. When it comes down to it, entrepreneurs often find it difficult to objectively assess their company’s market opportunities and value. Both external and internal succession planning is extremely time-consuming.

That is why it’s advisable to start the search for a potential successor early. External advisors can help to establish an objective decision-making basis and to carefully address the complex matter of succession planning. As well as the larger financial institutions and specialized law firms, the Confederation also provides an The link will open in a new window overview of possible contacts in Switzerland.

This page has an average rating of %r out of 5 stars based on a total of %t ratings
You can rate this page from one to five stars. Five stars is the best rating.
Thank you for your rating
Rate this article

This might interest you too