Succession planning is one of the most defining moments in a company’s lifecycle, yet it is often underestimated or postponed until it becomes urgent. A well-prepared transition secures the company’s long-term stability and safeguards its relationships with employees, customers, and investors.
Yet, for many SMEs, succession planning is no longer just a long-term consideration but an urgent reality. In Switzerland, where SMEs form the backbone of the economy, many business owners struggle to find a suitable successor. In 2024 alone, nearly 101,427 companies were searching for a transition plan. In Germany, for example, 231,000 medium-sized businesses are at risk of closure due to succession issues, an alarming 67,500 increase from the previous year. This highlights the growing need for structured, long-term succession strategies that safeguard business continuity and employee stability.
This decade a lot of baby boomer entrepreneurs are facing the topic “succession planning”. For them, their company represents more than just a business—a legacy built through decades of dedication, sacrifice, and personal investment.
Most plan to leave within the next five years, and they start talking about exiting and letting go. But letting go can be intensely emotional, often filled with concerns about whether successors will uphold the company’s values and continue its mission. So if there are no children or the children are not available for the business succession, what are the options?
If your son or your daughter is not available to take over, four primary succession planning options exist:
Management Buyout (MBO)
Selling the company to employees or the management team ensures continuity, as they already understand the business. However, financial structuring is crucial to making this a viable option.
An MBO allows for the preservation of company values and strategic vision. Two of its most significant benefits is continuity and stability—since the existing management team already understands the company’s operations, culture, and market, the transition is smoother and minimizes disruptions for employees, clients, and partners. This ensures that business relationships remain intact and day-to-day operations continue seamlessly. The existing management team will more likely uphold the founder’s legacy, maintaining the corporate culture and long-term objectives. comes with certain challenges that can impact its success.
But an MBO also comes with obstacles: one of the main obstacles is financing, as management teams often lack the necessary capital to buy the business outright. They typically rely on external funding, such as bank loans or investor support, which can lead to financial strain and increased debt. Additionally, while managers may excel in daily operations, they may lack the experience needed for ownership, economic strategy, or high-level decision-making, potentially hindering long-term growth. Internal tensions can also arise when transitioning from employees to owners, especially if multiple managers are involved. Differing strategic visions and financial stakes can lead to conflicts, making governance and decision-making more complex.
Management Buy-In (MBI)
External managers or investors acquire and take over the business. This can bring fresh perspectives and strategic growth, but cultural alignment is essential. It offers several benefits, such as bringing in fresh perspectives and new ideas, which can drive strategic growth and innovation. External managers often bring diverse industry experience and expertise that can enhance the company’s performance. Additionally, an MBI can provide access to new networks and resources, potentially opening up new markets and business opportunities. However, an MBI also comes with obstacles.
One key challenge is cultural alignment, as external managers may struggle to integrate into the existing company culture, leading to employee resistance. There is also a risk of disruption to established operations, as new leadership may implement changes that can create uncertainty or dissatisfaction within the organization. Lastly, an MBI often involves higher transition risks, as external managers might lack in-depth business knowledge, potentially leading to slower decision-making or operational inefficiencies during the initial phase.
Sale to a Private Equity Firm
This provides liquidity and access to capital for scaling but may result in strategic changes that differ from the founder’s original vision. Selling a company to a private equity (PE) firm offers significant advantages, particularly regarding financial security and growth potential. It provides founders with immediate liquidity, allowing them to cash out fully or partially while still benefiting from future value creation if they retain a minority stake. PE firms also bring capital and strategic expertise, helping businesses scale rapidly through acquisitions, international expansion, or operational improvements. With a clear focus on increasing valuation, they aim to maximize profitability, often leading to a higher exit multiple when they sell the company.
However, this path also comes with challenges. Founders often experience a loss of control, as PE firms prioritize financial returns and may introduce strategic changes that conflict with the company’s original vision or culture. The pressure for rapid performance improvements can result in restructuring, efficiency measures, and heightened operational demands, potentially affecting employee morale and long-term stability. Additionally, many PE firms use leveraged buyouts (LBOs), financing acquisitions with debt that the company must repay. Failure to meet growth targets can lead to financial strain and reduced reinvestment in innovation.
While selling to a private equity firm can unlock new growth opportunities and financial rewards, founders must carefully weigh the risks of losing strategic influence, increased economic pressure, and potential cultural shifts before deciding.
Sale to the Competition.
Market consolidation can enhance competitive advantage, though concerns often arise about whether the competitor will maintain the company’s identity and workforce. Selling a company to a competitor can be a strategic and financially rewarding exit when no family successor is available. Competitors often recognize the value of acquiring an established business, leading to higher valuations and faster deal closures. With an existing understanding of the industry and customer base, they can integrate the business more seamlessly. This type of sale can also ensure operational continuity, as competitors may choose to retain the brand and key employees to maintain market stability. In some cases, employees benefit from new career opportunities within a larger organization.
However, selling to a competitor comes with significant risks. Founders lose control over the company’s future, and while initial promises may be made to preserve its identity, post-acquisition changes can alter its strategic direction, branding, or culture. Employees face uncertainty, as restructuring and job redundancies are common in such transactions, and customers may react negatively if service models or pricing structures change. Another major risk is sharing sensitive business information during negotiations. If the deal falls through, the competitor may use this insight to strengthen their position, potentially putting the seller at a disadvantage.
While selling to a competitor can be a profitable and practical solution, careful planning, legal protections, and a well-managed transition strategy are essential to safeguard employees, customers, and the company’s long-term legacy.
Let’s face it: Letting go for baby boomers is not just about transferring ownership; it is about closing a chapter of life that has defined their purpose, reputation, and professional legacy. There is the fear of losing identity.
One of the most emotionally charged exits is selling to a competitor. While financially attractive, it often comes with a deep sense of loss and apprehension. Founders may fear that their company’s unique culture, long-standing client relationships, and core values will be dismantled or absorbed into a larger entity that does not share their vision. For baby boomers, a business is often a lifelong achievement, not just an economic venture. Unlike younger founders, who may have built their companies with agility and potential exits in mind, baby boomer entrepreneurs grew their businesses when long-term stability and personal dedication were the norms. Their companies have been a source of identity, pride, and purpose, making stepping away deeply emotional.
However, what if succession planning was seen not as a burden but as an opportunity?
For 21st-century founders, exit planning isn’t a farewell—it’s a milestone. Unlike Baby Boomers, who often see their businesses as personal legacies, today’s entrepreneurs treat them as dynamic assets, built for growth, scalability, and transition. A well-executed exit isn’t an ending; it’s a launchpad for reinvention, new ventures, and financial freedom.
Startups integrate exit strategies from the start, much like securing a life insurance policy—not out of fear, but as a strategic safeguard. They embrace agility, innovation, and flexibility, recognizing that succession planning isn’t about what they leave behind, but about the new opportunities it unlocks.
What 21st-Century Founders Can Gain from Baby Boomers’ Experience!
For Baby Boomer founders, an exit isn’t just a financial transaction—it’s a turning point that shapes a company’s future. Their approach prioritizes legacy, loyalty, and long-term brand value, offering key lessons for today’s entrepreneurs.
A company’s identity, employees, and clients are its most valuable assets. A well-planned exit should protect trust and continuity, not just maximize short-term gains. Baby Boomer-led businesses thrive on deeply embedded core values that foster employee and customer loyalty—key factors in long-term resilience. Selling to the highest bidder isn’t always the best move if it threatens company culture. Ensuring the new owner aligns with the brand’s ethos helps sustain its reputation.
Loyalty is a powerful asset. A brand’s equity can erode if employees and clients feel abandoned in the transition. Involving key stakeholders early in the process strengthens trust and business continuity. Legacy businesses with a strong heritage—whether in service quality, customer relationships, or craftsmanship—often command higher valuations. Preserving these strengths through an exit can enhance long-term success.
For 21st-century founders, an exit should be more than an endpoint. It’s an evolution—one that safeguards what made the business successful while opening doors to new opportunities.