Uncategorised

The existential threat to German family businesses – greed

Germany’s huge and thriving family business sector faces many challenges, including greater tax burdens and intense global competition, but perhaps the biggest threat to their future is greed.

This is the view of one of the country’s top family business academics, Dr Tom Rüsen, who sees many of the next generation owners of Germany’s Mittelstand being motivated by different priorities than their parents, namely short-termism and even greed.

Rüsen’s argument is expressed in a Viewpoint he has written for Family Capital. In it, he talks about a transition happening in the ownership structures of Germany’s family businesses, which is bringing about significant cultural changes related to ownership in the sector.

“It is well documented that the global transition of wealth is happening rapidly and the consequences of that transfer will be immense, not least in Germany,” he says. “Here we are seeing many of the next generation of owners content to take on ownership of these businesses, but less happy to work on the operational side of them.”

The head of the Witten Institute for Family Business argues that the tradition of stewardship in Germany’s family sector, which says to family owners that they have inherited the business, but doesn’t entitle them to sell the business, is becoming less adhered to.

“With the growth of non-operational family shareholders, the practice of stewardship is threatened with erosion in Germany,” he says. “It’s a potential scenario that many of these next generation owners think more like Anglo-Saxon owners of businesses. They have become more short-term in their outlook.”

Rüsen adds that if many of them are losing the culture of stewardship then next generation owners will be more likely to sell their businesses. In order to avoid this happening, or at least mitigate the growth of a more short-term approach to managing these businesses, Rüsen says there needs to be a concerted effort to educate non-operational family shareholders.

For this to happen, says Rüsen, it will require more than these shareholders being able to read a balance sheet of their businesses, but for them to be part of a much more concerted educational process.  “They need to understand how the business family works and how that is interconnected with the operational business – and this should be a detailed and ongoing process.”

Subscribe

You will need a Premium Plus Subscription to access this database.

Exclusive news, analysis and research on global family enterprise and private investment offices.

Access to the most comprehensive fully interactive database on global family offices, principal investment offices, and family enterprises.

Check Deal Data, Senior Staff, and New Analysis on more than 500 family/principal investment and holding groups

Already have an account? Login

Subscribe

You need at least a Premium Subscription to read this article.

The most comprehensive information service on the global family enterprise world, featuring exclusive news, analysis, research and data on global family enterprises, family offices, and private investment offices.

Premium

£ 299

Annually

  • Exclusive reports, analysis and commentary
  • Exclusive access to family/private investment office deal information
  • Exclusive interviews with principals and senior management of family/investment offices
Subscribe now

Premium Plus

£ 399

Annually

  • Access to All of Premium
  • Access to all of FamilyCapital Analytics, our interactive database with more than 500 detailed profiles of family investment groups

More Info

Subscribe Now

Already have an account? Login

Subscribe

Exclusive news, analysis and research on global family enterprise and private investment offices.

Membership

Free

  • Exclusive reports, analysis and commentary
Sign up

Premium

£ 299

Annually

  • Exclusive reports, analysis and commentary
  • Exclusive access to family/private investment office deal information
  • Exclusive interviews with principals and senior management of family/investment offices
Subscribe now

Premium Plus

£ 399

Annually

  • Access to All of Premium
  • Access to all of FamilyCapital Analytics, our interactive database with more than 500 detailed profiles of family investment groups

More Info

Subscribe Now

Already have an account? Login