“It was always clear to me that I would join one of our family businesses” – Matthias Händle, Partner at PETER MAY Family Business Consulting, in an interview
In an interview with Alexander Hornikel, Senior Partner at Kloepfel Consulting, Matthias Händle talks about the importance and advantages of family businesses and the current challenges family-run companies face today.
You are a partner at PETER MAY Family Business Consulting GmbH & Co. KG. What was your professional career like?
I was born into an entrepreneurial family. My father was the third generation to run an office management company based in Osnabrück. Together with his two brothers, he was also involved in a machine factory and a BMW agency in Nuremberg.
It was always clear to me that I would join one of the family businesses. So I completed a dual business administration degree in Kiel. Since the practical blocks gave me an insight into many different companies, I was motivated to complete my master’s degree in international business administration at Boston University in London and Boston.
As it is often the case with family businesses, sometimes the path is different than expected and so I joined my wife’s family business after my master’s degree. Initially, I worked there as my father-in-law’s assistant, then as managing director of our retail activities, then as key account manager and finally for over ten years as managing partner and CEO of the group.
During my part-time doctorate at the University of Bradford, I already dealt with questions of international trade. This enthusiasm for foreign trade motivated me to become president of the foreign trade association of the retail trade, a member of the presidia of HDE ( German Trade Association) and BGA ( Federal Association of Wholesale and Foreign Trade), as well as a member of the Foreign Trade Advisory Board of the Federal Ministry of Economics.
In addition to shoe retailing, I have always been interested in other industries as well, because I am convinced that you can learn a lot from different approaches. I was a member of MAXDATA’s supervisory board and now work for L&T (textile retailing), Projekteins (IT development) and Rügenwalder Mühle on their advisory and supervisory boards.
What are the advantages of family businesses?
Over 90 percent of all companies in Germany are family businesses and around 55 percent of all employees work in such a company. Although the prejudice exists that family-run companies are less successful, this is clearly refuted scientifically. The focus on thinking in terms of generations entails a completely different approach, even a completely different business management.
People who work in a family business often only notice the difference when such a company changes ownership as a result of a takeover. I am convinced that family businesses also have to work hard and that it is certainly not always fair, but the culture, the mood – perhaps also the sense of work – is different.
So that’s why you’re still working for family businesses?
Yes, after I had sold our family business to a private equity fund, a long conversation with my friend Prof. Peter May led me into advising family businesses and owners. Here I can contribute my operational experience from my 24 years of work in a family business. I support the shareholders, and in many cases the next generation, in their task of strategically managing and developing the company. I thus form the interface between the owner and the company. As I have sat on both sides in my career, I can not only quote from books, but also know what it is like to be personally involved.
What obstacles do family businesses face in choosing the right owner strategy?
In a listed or state-owned company, no one is interested in what strategy the shareholders would like to pursue. At the end of the day, they can sell their shares at any time if they don’t like the work of the management.
In a family business, the situation is quite different: Part of the dividend can be described as an emotional dividend. But this is also where the first challenge lies. Where there is a lot of light, there is a lot of shadow, as the saying goes. The family members are not only differently educated and emotionally bound to the company, but they are also individuals with their own personalities and goals. Controversial owners need a lot of strength to overcome conflicts – strength that is lacking in case of doubt for the further development of the company. We all know the great series from Denver Clan and Dallas. The viewer can enjoy the destructive mixture for years. As a person affected, such a situation is often hell.
Where there is a lot of light, there is a lot of shadow
Matthias Händle
Why this long version? It must be clear to everyone that the owner strategy is directly linked to the corporate strategy. If something goes wrong on the owner side, it will at best lead to an organized sale, at worst to the ruin of the company. Therefore the development of a suitable owner strategy has the highest priority. For single owners this problem does not arise and perhaps not yet in the second generation if the siblings work together harmoniously in the company. At the latest with the second generation change it becomes however compelling to systematize and convert the individual topics.
Which challenges are currently particularly critical for family businesses?
Spontaneously, digitalization and disruptive developments in many business areas always occur to you immediately. This is certainly true, but family businesses have always been adaptable and able to keep up with developments. And even more: they often triggered these developments in the first place.
Today the subject of inheritance tax again plays a significant role for almost all of my mandates. Politically and socially, we all have the feeling that the rich are getting richer and richer and that owners of large companies have enough money anyway. But now we have to see that the prosperity of our country is built on the middle class and that the transfer of family businesses into a new structure demonstrably does not generate any economic added value – quite the contrary! Now I would like to give here no inheritance tax treatise, but in my task, I come past many topics, which affect owners today.
Another topic in owner families is cooperation. They are being considered not only for reasons of financing, but also in order to obtain additional know-how. Since owners are particularly critical of the disclosure of trade secrets, such a step is often fraught with reservations and often means a departure from the strategies pursued so far. Nevertheless, cooperation – especially among family businesses, which often “tick” similarly – can be a suitable measure to meet new challenges.
Another urgent problem for family businesses – which are often located away from conurbations – is that it is becoming increasingly difficult for them to find suitable managers and skilled personnel. This calls for creative solutions and new working models.
What three tips do you have for family businesses when it comes to succession?
First of all, all those involved should be aware that succession is one of the most difficult tasks in the life of an entrepreneur, both objectively and emotionally. Reducing the issue of succession to tax aspects or to tradition and the articles of association often leads to considerable problems.
You should start early with the considerations in order to be able to think about all the possible options ideally alone and together with experienced consultants.
After all considerations have matured and prepared for implementation, the agreed steps should be carried out consistently and quickly. The necessary freedom must be given to the successor, since the next generation will certainly do a lot differently, but not necessarily worse. It is important to bear in mind that the passing generation can only positively influence the fate of the company in the long run through a successful succession.
How does the future of family businesses look like?
The oldest family business is Houshi Onsen from Japan, founded in 718. The oldest German company is the winery Fürst Hohenlohe Oehringen from 1253. I have great confidence in family businesses in general and in Germany in particular. Nowadays more and more professionalization is required and this is exactly the challenge that family businesses are facing.
Thank you very much for the interview!