Holistic Approach and Personalization
A significant trend in succession planning is the shift toward a holistic approach that takes into account clients’ individual needs, goals, and circumstances. Every succession case is unique. The goal is to develop tailored solutions that integrate legal, tax, and financial aspects while also taking clients’ personal wishes into account. When the business owner who would otherwise dictate the succession is no longer present, individual interests, personal life plans, goals, and wishes come to the forefront. This often results in a situation where no successor can be identified. The “opposite scenario” can also occur: there are more than one potential successor, and the choice is difficult. And just as often, while interested successors are available, they do not want to bear the business risk to the same extent that their parents had to.
In family businesses and wealthy families, complex family structures and differing interests can further complicate succession planning. In a globalized world, many clients operate internationally or hold assets in various countries. Terms such as “blended family,” “international presence,” and “relocation” suffice to illustrate the complexity. Lawyers and tax advisors play a crucial role here by identifying conflicts, drafting family agreements, and conducting mediations to ensure a smooth transition.
The trend in advisory services—shifting away from purely fact-based advice toward mediation-oriented support—stems from the openness and diversity of “acceptable” lifestyle models. The automatic assumption of “one person handing over to one person” no longer applies. Solutions are emerging that involve family-owned companies, foundations, hybrid structures, or holding structures for relocation and exit planning—and, of course, the direct transfer to the next generation continues to be an option.
This complexity in succession planning often requires close interdisciplinary collaboration among various specialists. In addition to attorneys and tax advisors, management consultants, financial experts, and asset managers are also involved in the process. And these advisors need psychologically grounded knowledge and coaching experience. Together, they ensure that all relevant legal, tax, financial, business management, and—crucially—human aspects are taken into account to achieve the best possible results.
At this stage, the services of external providers are also sought to answer questions such as “How do I find a buyer?” and “How do I find an investor?” Professional platforms offering a wide range of support services—including more in-depth assistance—play a vital role here.
However, a holistic approach also means considering what comes after the transfer of the business—regardless of the form it takes. Those who have sold their business must also structure, manage, and pass on their newly liquidated assets to successors. This is where the services of experienced family offices come into play; it is best to involve them in the planning process early on so that lawyers and tax advisors can also be brought in at an early stage to help optimize the process.
Those who no longer run their business—or no longer run it alone—must also face other challenges and redefine their role, whether within the company, on behalf of the company, or in an entirely different sphere. Psychological counseling is also beneficial in this context.
Opening Up to Investors Instead of a Complete Exit
In a rapidly changing and consolidating business world, more and more companies and owners are recognizing the advantages of a succession solution that involves parties outside the family. This could mean continuing the business under experienced management, a partial sale to strategic investors, or a merger with other partners.
In this context, succession planning outside the family often requires complex negotiations and the drafting of contracts. The complexity is often greater than with intra-family succession because “outside third parties” are dealing with one another and vetting each other, much like in an M&A process (key term: “due diligence”). Attorneys, tax advisors, auditors, and M&A consultants work to assess the financial, legal, and tax situation of the company or its assets. This helps identify potential risks and opportunities in order to make an informed decision. The experts support their clients in assessing risks and developing strategies to minimize them.
Here, too, external providers come into play, serving as a point of contact to identify advisors and potential buyers or investors and to initiate initial contact.
Early Succession Planning
Another notable trend is early succession planning. More and more companies and individuals are recognizing the benefits of preparing for the succession process well in advance. Advisors rightly encourage their clients to start thinking about succession at an early stage to allow sufficient time for comprehensive planning and structuring. This enables a smoother transition and reduces potential legal and tax risks.
Planning early often fosters openness to alternative models. In this context, an “exit” is not an exception but the norm. Partial openings for investors and co-shareholders, as well as family-independent foundations designed to safeguard the business, are just as much a part of the repertoire as employee ownership models.
Tax Optimization and Sustainability
Tax optimization remains a central concern in succession planning. The complexity of (national and international) tax law, the tax authorities’ presumption of mistrust—or at least the perception of it—and the sheer volume of interrelationships, red flags, and tax pitfalls have not worked to the client’s advantage. Business succession—whether within or outside the family—requires early, professional tax advice.
In addition, another trend has emerged in recent years: the consideration of sustainability aspects. More and more clients place importance on ensuring that their succession planning is environmentally friendly and socially responsible. Lawyers and tax advisors are therefore increasingly integrating sustainability criteria into their advisory approaches.
Cultural and Strategic Fit
In any succession planning, it is not only the financial aspect that matters, but also the cultural and strategic fit between the outgoing entrepreneur and the successor. This applies equally to both family and non-family successions. Advisors must help clients take these aspects into account and evaluate the long-term likelihood of the transaction’s success.
This desire for a compatible corporate culture, for harmonious collaboration or succession, and perhaps also for the preservation of corporate values, only superficially argues against succession outside the family. It is precisely the incoming or succeeding “newcomer” who can provide fresh impetus without being bound by dogma; they may be better able to recognize existing strengths than a family member.
Succession from outside the family can, of course, be difficult due to the potential impact on employees, customers, and business partners. Legal and tax advisors also play an important role here in communicating with the relevant stakeholders to ensure a smooth transition and minimize potential uncertainties.
Conclusion
Succession planning is a dynamic field that is constantly evolving. Attorneys and tax advisors face the challenge of staying continuously informed about new legal developments, tax regulations, and societal trends. A holistic approach, early planning, interdisciplinary collaboration, the use of technology, an international focus, consideration of sustainability, and navigating complex family structures are just a few of the aspects that play a central role in succession planning today. The expertise of legal and tax advisors must also be comprehensive (though not necessarily combined in a single individual) in order to address these dynamics, facilitate smooth succession processes, and protect their clients’ assets.
Succession planning outside the family broadens the perspective on succession planning and brings with it new challenges and opportunities. Therefore, anyone wishing to offer intra-family succession planning—which will continue to have a firm place in succession planning in the future—faces the task of understanding the legal, tax, and financial aspects of these options and advising clients on them in a well-informed manner. Openness to non-family succession solutions, expertise in contract negotiations and due diligence, the use of technology and data analysis, consideration of cultural and strategic fit, and effective communication with stakeholders are key aspects that must be taken into account in non-family succession. Attorneys and tax advisors who understand these trends and actively integrate them into their advice will help their clients successfully execute succession transactions.
