Codifying Succession

In 2019, while in school I visited a classmate’s family business in Barcelona. Not only did they successfully diversify into other business models, but they also achieved a form of unity I did not know existed among 3rd or 4th generation businesses. They planned out the whole day with multiple stops and even gave the 80y old grandma a platform to speak. Contrary to that in Germany, one reads about countless feuds and fights between relatives.

While I was there I noticed a palpable sense of collective achievement and dedication to the business's legacy. This alignment was facilitated by open dialogue and a clear set of principles guiding their operations and succession planning.

Two key policies stood out from their approach. First, the family's decision to prioritize the business over familial ties in professional roles underscored a commitment to meritocracy and competence.

They implemented a rule requiring family members to gain external experience before joining the business, ensuring that those who did were not only passionate but also qualified. This decision highlighted a crucial distinction: they operated as a "family business," not a "business family," placing the enterprise's interests at the forefront.

Second, the importance of setting clear expectations and outcomes from the outset was emphasized: My classmate who will never have the chance to take a direct role in the company initiated the trip after all.

I can only imagine the German counter-draft. A split family that failed to communicate who will take over and who will not. The last thing an heir that feels overlooked would do is invite his friends to spend a day with her/his family..

Germany's top 500 family businesses contribute nearly 43% of the country's GDP, emphasizing the vital role of family enterprises in Germany's economy​​. ¹

Family businesses in the United States account for approximately 80% to 90% of all businesses, employ around 60% of the total U.S. workforce, and are responsible for 30% to 60% of the domestic GDP​​. ²

In Germany, more than one-fifth (21 percent) of the top 200 companies are family-owned, while in the United States, this figure is just 6.5 percent​​. ³