Succession: important shift in ages?
The Instituut voor het FamilieBedrijf (IFB), a Flemish knowledge centre for family businesses, published a very interesting article written by Jozef Lievens, the centre, who is a lawyer specialised in issues related to family business, more specifically succession, governance and conflicts among company partners.
He shared a clarifying insight on the ideal age for succession. According to Lievens, for both the current family business owners and their successors there are age periods in which the succession is ideally set.
Researches show that so far most of the owners left their role as leaders when they were between 65 and 75 years old, whilst successors usually took over when they were between 38 and 48 years. However, times have changed and due to the increasing lifespan and the better average health, owners stay fit until they are older and are less willing to hand over the torch early. Therefore, nowadays owners decide to transfer their business when they are between 68 and 78 years old.
According to Prof. John Davis of M. I. T., an inverse phenomenon occurs for the heirs who wish to take over the family business earlier. Nowadays, they are between 32 and 40 years old when they feel ready to become CEOs.
It is very clear that this situation can lead to conflicts. If the successor wants to take charge at a young age and the owner is willing to give up the leadership later, obviously there are going to be problems. In addition, this new situation implies that the period in which the current leader and the successor co-operate will last longer. How can we solve this problem now?
It cannot be stressed enough that clear agreements on the time of succession are important to prevent conflicts. These agreements are preferably laid down in a charter in tempore non suspecto.
If it is indeed the case that the period of co-operation between the leader and the heir will last longer, that co-operation must be arranged properly, and communication will be the key.
Even more important and a more definitive solution is that the leader finds a new role in due time, inside or outside the family business. This role often lies in the field of governance.