A successful business transfer requires forward-looking planning over several years. Hans Jürg Domenig, President of the Center for Advanced Studies in Business Transfers, sets out the key issues for outgoing owners and highlights the importance of raising awareness of succession among entrepreneurs.
More than one in six Swiss SMEs are currently looking for a successor, according to a study by the consultancy Dun & Bradstreet. This share is expected to rise in the coming years as the baby-boomer generation retires. Business succession is a complex process involving legal, financial and human aspects, and has become a major structural challenge for the long-term resilience of the Swiss economy. Hans Jürg Domenig, President of the Centre for Advanced Studies in Business Transfers (CHDU) and founder of ANSATZ, a company specialized in supporting SMEs through the succession process, calls for greater recognition of this issue.
Why are so many entrepreneurs in Switzerland now looking for a successor?
Hans Jürg Domenig: There are three main reasons. The first is demographic. Business leaders from the baby-boom generation will all retire by 2029, which is increasing the number of potential sellers. The second is cultural. Switzerland strongly promotes start-ups and new business creation through numerous support programs, but succession receives far less attention, even though there are more potential successors than sellers. In fact, for around 20,000 companies to be transferred over a five-year median, some 50,000 new businesses are created each year. Finally, many business models are closely tied to their owner, whose strong personal involvement makes succession particularly challenging.
When should an entrepreneur start preparing for succession?
Domenig: A minimum of three to five years is required. Ideally, it is closer to ten. Effective planning involves structuring and sharing the company’s key knowledge with the future leader, formalizing relationships between the various stakeholders, and preparing clients for the transition so that the business can continue to operate sustainably beyond the current management. In our annual publication, the Nachfolge Post, we outline a ten-year succession plan with several recommendations, such as approaching only a limited number of credible candidates to preserve trust and maintain favorable negotiation conditions.
What are the most common pitfalls in a business transfer?
Domenig: The main obstacles are almost always human. Many owners have not considered their life after the business, which makes the transition particularly difficult. As for the potential successor, outgoing owners often expect a replica of themselves, which is unrealistic. Many also still view succession as a simple sale. In reality, it involves a significant change in culture and values, affecting both the company, whose identity often reflects that of its owner, and the outgoing entrepreneur, who faces a loss of status and a personal transition that must be anticipated.
Beyond the traditional model of family succession, new forms of business transfer are emerging. Which do you see as the most promising?
Domenig: A particularly interesting model is the shareholders’ agreement, in which several individuals join forces to acquire and manage a company. This approach helps address one of the greatest challenges in succession, namely finding a single person who has both the necessary skills and the financial resources. It is essential, however, to ensure that all shareholders share the same values, the same vision and the same level of commitment, along with clear rules regarding the overall strategy.
How does the CHDU support SMEs in planning their succession?
Domenig: We work along four main lines. First, at the practical level, we organize free information and networking events for outgoing owners, as well as the Phoenix Award, which recognizes Swiss companies that have been successfully transferred for more than a century. We also work on the "profession and training" dimension, with programs designed to ensure a high level of expertise among succession advisers. At the policy level, we advocate for legislation that is more favorable to owners and to business transfers. Finally, our "research" focus aims to understand why certain companies endure over several generations, so that we can share these insights and inspire other SMEs.
Which institutional or policy measures could facilitate business transfers in the coming years?
Domenig: At present, the system penalizes successors. Banking rules such as Basel III make financing more difficult, and certain tax practices treat a business transfer as a "gift", leading to taxation. Together with Dominik Blunschy, a centrist National Councilor from the canton of Schwyz, the CHDU has called on the Confederation to propose better financing options, including more accessible loans, as well as smarter tax rules that recognize succession as a genuine investment. I remain optimistic. A growing number of political actors understand the importance of supporting strong existing companies in order to strengthen the Swiss economy over the long term.
