In Switzerland, almost 100,000 SMEs will be facing succession issues in the coming years. One in three of these will not find a suitable successor. Those who postpone succession planning for too long will not only miss out on financial opportunities, but also risk not being able to entrust their life’s work to reliable hands or having to give up their say completely. In the worst case, the company may even face liquidation.
Succession is not the final administrative step, but a project that takes several years. It affects not only the legal and tax structure, but also the family, employees, customers, and the owners' assets. Those who start early give themselves room to maneuver, explore alternatives, and actively shape the transition. Early planning is therefore a key success factor.
Treating succession as a strategic project
Many entrepreneurs put off addressing this issue for a long time, whether due to time constraints, the pressures of everyday life, or because it is emotionally difficult to think about their own role after retirement. But it is precisely the early initiation of the project that opens up opportunities. Within five to ten years, a range of options can be carefully evaluated: Should the company be handed over within the family, is a management buyout an option, or should it be sold to an external buyer? Those who only ask themselves these questions shortly before retirement often have to live with compromises – whether in terms of the purchase price, the continuity of the workforce, or the preservation of the corporate culture.
Effective succession planning therefore requires time. For example, it may be worthwhile to voluntarily appoint an auditor if one has previously opted out – especially since a sale is much smoother when there is assurance that the accounts of recent years have been properly maintained. The tax dimension also has its temporal pitfalls: for example, there is a blocking period for distributions of assets by the buyer of the company within five years of the sale if a system change takes place (so-called indirect partial liquidation). A system change occurs when the company is transferred from the seller's private assets to the buyer's business assets. There is also a five-year blocking period, for example, when a sole proprietorship is converted into a corporation. This can be particularly burdensome from a tax perspective if the owner is planning to retire early or a more lucrative sales opportunity arises at short notice. Those who plan early can take these hurdles into account and overcome them.
Numbers aren't everything – the emotional factor
Succession always affects people. Approximately 42% of SMEs are transferred to direct relatives, 11% to other relatives – so succession often takes place within the family. This creates tension between two systems: on the one hand, the family with its emotions, traditions, and expectations. On the other hand, there is the company, which is focused on performance and future viability. When the founder relinquishes control, it is not just a matter of contracts, but also of trust. Letting go is difficult, while successors first have to find their place.
It is precisely these soft factors that often determine the success or failure of a handover. Unspoken expectations, conflicts, or unclear roles can cause more damage than a poorly structured contract. Here, too, early and open communication helps. In some cases, it makes sense to use external moderation or so-called family governance to organize the different interests and set common goals. This prevents personal tensions from jeopardizing the company.
The succession gap in Switzerland
Statistics also show that succession is a pressing issue. A considerable proportion of Swiss SMEs are run by the baby boomer generation, which is approaching retirement. A study from 2022 found that almost 100,000 SMEs are run by managers over the age of 60. At the same time, digitalization, a shortage of skilled workers, and changes in the capital market are exacerbating the situation.
But don't panic – there is also an upside: those who act now can take advantage of market opportunities created by the surge in demand for company acquisitions. Entrepreneurs who plan proactively can secure advantages in an increasingly competitive environment. Those who plan their succession with foresight simply have more options – whether through an internal transition, a sale, or a hybrid form. Prevention takes time and energy, but it is far cheaper and more promising than, for example, a sale under pressure.
From overview to implementation
This overview shows that business succession is a complex and sensitive undertaking that requires more than just an appointment with a notary or a simple sales contract. It is about passing on your life's work to the next generation – in a legally sound, economically sensible, and socially sustainable manner.
Business succession cannot be achieved at the last minute. It is a strategic process that must be initiated in good time, and we are happy to accompany you through it. If you plan five to ten years in advance, you can take advantage of tax planning opportunities, defuse conflicts within the family, increase the value of the company, and find a solution that is both economically and humanly convincing. In short, the earlier you start, the greater the chance that your company will remain successful after you leave.
