Generational change in jeopardy: family businesses are running out of new recruits

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Family business: Lack of young talent jeopardises the upcoming generational change

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Many family businesses in Germany are due to transfer a company or share in the next three years: In a survey published on Monday by the Munich-based Ifo Institute, 43 percent of the companies surveyed said so. In larger companies with more than 250 employees, as many as 50 percent are planning a generational change in the next three years.

Since 2017, Ifo has been collecting key data on behalf of the Foundation for Family Businesses in surveys on economic policy issues. Every year, 1500 to 2000 entrepreneurs from family businesses and non-family businesses of various sizes from a wide range of industries take part. According to Ifo, the database includes more than 12,000 companies, half of them family businesses.

Another Ifo survey of companies from the database shows that 42 percent do not yet have a successor from the family for the management. "The owners are getting older and older, and fewer and fewer family businesses are able to manage a succession within the family, most recently only 34 percent," said Annette von Maltzan of Ifo.

In general, the figures from the database underpin the longevity of family businesses, according to Ifo: Almost half are in the second and third generation, and around a fifth make it beyond that. The oldest companies in the database have existed since the 14th century. Five percent were founded before 1900, another ten percent in the first half of the 20th century.

Individual interests and poor conditions discourage the next generation

By 2026, an average of 38,000 handovers per year would be due. However, the career paths of the younger generation are increasingly determined by individual interests and run outside the parental company, the economic researchers explained. Rainer Kirchdörfer, chairman of the Foundation for Family Businesses, also complained about poor framework conditions: "Bureaucracy, energy prices, a shortage of skilled workers and the tax burden are discouraging the next generation."

eru/AFP/dpa-AFX