What are the most common drivers and challenges for succession?

As part of the succession ready project, Univations has written a policy report that investigates the high failure rate of SME succession in the EU and analyses policy report analyses the current state of SME succession with a particular focus on the member states of origin of our project partners – Germany, Greece, Ireland, the Netherlands and Slovenia. Prior to this policy report, individual country reports on SME succession in Germany, Ireland, Greece, the Netherlands and Slovenia were carried out, analysing the state of succession, country-specific challenges, current supports and key advisors as well as government policies. Based on these case studies, this policy report intends to identify crucial gaps in the current SME succession process as well as to derive policy recommendations in order to address these gaps.

The report delivered five major conclusions:

1. A high failure rate of SME succession is a pressing issue across the EU. A high percentage of these unsuccessful successions could likely be avoided with better planning, better awareness of the succession process and more external support.
2. Finding an SME successor will be an increasingly significant task in the future. This is primarily due to shifting demographics, with the large cohort of the baby boomer generation approaching retirement and subsequent generations being fewer in numbers and less willing or able to take over a business.
3. Rural areas are more heavily affected by the negative impacts of bad succession planning than urban centres. The reasons for this – amongst other things – are to be found in the exodus of young people from rural areas as well as the perceived unattractiveness of agricultural SMEs.
4. In each country, there are already structures in place to support SMEs with the succession process. These include business support organisations such as the Chambers of Industry and Commerce and government agencies as well as private consultancy firms. They provide support and assistance that range from awareness raising, consultancy to matchmaking activities. These already existing structures may provide the basis for future measures to be taken.
5. While policy makers do already recognise SME succession as an important issue that needs addressing, more effective measures could be taken to ensure lower failure rates of succession in the future. These could include the introduction of a more succession-friendly tax and regulatory framework, the providing of financial instrument that enable the succession. In addition to that, the launching of public awareness campaigns that present the potential benefits of an SME succession could lead to more aspiring entrepreneurs considering a business take over a viable alternative to founding a start-up.