In a study conducted by the consulting firm Ernst & Young, only 13% of family businesses move on to the next generation and only 3% survive to the third generation. In Romania, less than 7% of young legal successors of a family business want to keep working and leading their family’s business. At the same time, we find ourselves at a turning point, 30 years after the founding of the first private companies in Romania after the Communist era and implicitly the first generation of entrepreneurs who are at the point where they have to hand over their life-long work.

Do they have a succession plan?

For most entrepreneurs, retiring from the business is a difficult time. Most of the time, the business is an important achievement of their life, and parting with it or taking a secondary place in decision making is not a simple thing to accept. Postponing this moment is the most natural thing that happens. However, one must be aware that it takes a lot of effort and time to successfully complete a business transfer. Business continuity cannot exist in the absence of a succession. We are all mortal and in the absence of a business transfer plan, the company will have every chance of disappearing alongside its owner. There will be a risk of losing assets and employees. Therefore, early planning of business succession is one of the most important elements of entrepreneurial life.

While planning the succession of a company, the current owner must keep in mind that there is a limited time during which the successor can be sought. Whether the successor is a family member, an employee, or someone from a third party, drawing up a succession plan helps entrepreneurs have clear monitoring of the whole process and transposition of the entrepreneur's will in what will follow.

Unplanned succession can occur due to divorce, death, illness, litigation in the owner's family, or even due to a sudden decision by the entrepreneur to simply stop. Sometimes successful entrepreneurs have the desire to leave the company because they have developed sufficient financial resources to ensure the well-being of family life. Unforeseen situations can arise at any time due to the sudden withdrawal from the business, the state of health, injuries, or even the death of the entrepreneur. In these situations, the succession of business must be completed in a short time, to ensure the further survival of the company. The precondition for this to be achieved is that the contractor has adequate planning in place to deal with such emergencies.

Therefore, entrepreneurs should consider succession planning in advance. At the age of 55, awareness and succession planning should begin. Then there is usually enough time left to comprehensively analyze the various alternatives, inform the parties involved, and make the necessary decisions, as well as to make all the necessary corrections to the business.