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Insurance experts advise entrepreneurs to start planning for their succession ten years before they retire. For the Donatsch family, that's too early. But how long will they wait? We asked the family.
In 1994, Georg Donatsch took over his father's engineering and surveying company, Donatsch Ingenieure AG, and he has been managing it ever since. Twelve years later, he went on to take over the entire share package and the management of Lutz Schmid Ingenieure AG. Since 2015, he has managed both companies under the name Donatsch + Partner AG at their Landquart, Poschiavo and Bad Ragaz locations. The innovative engineering company, which started out as a small family business, now has 40 employees and has trained more than 100 apprentices. But Donatsch + Partner AG will remain in the family. That's a given.
Retirement is ten years away
Georg and Regula Donatsch are the leading figures of Donatsch + Partner AG. Both have put their heart and soul into the company for years. With two daughters and three sons, the two had little free time and even holidays spent together were a rarity. Most people look forward to retirement: more time for mountain, bike and ski trips, for hobbies and for one another. But not Georg and Regula Donatsch. At 50, Regula Donatsch is still going strong: "I still feel very young, I enjoy life and I'm a long way from retirement." She might have to work for another 20 years, which she accepts. Georg Donatsch also places the needs of the company before his own: "I'll think about my own retirement once I've settled the question of succession."
Succession is a big topic at the family table
On the one hand, the Donatsch family is very much aware of the issue of succession; on the other hand, it is still a long way off. "Succession and business in general have always been a topic at the family table," explains Regula Donatsch. Their children have been deeply involved in the company from an early age. They have already helped a lot during their school time, at home or as measuring assistants at the company. Many employees have known them since they were children. "At his confirmation, Gian was already talking about taking over the place," Georg Donatsch adds with a laugh. For the siblings it's clear that sons Gian (22) and Nico (24) will take over the business. However, concrete plans have yet to be made. "Both are just beginning their studies, so it may take a while," explains Georg. "We don't want to put any pressure on them to start planning for succession." Regula Donatsch expresses herself more concretely: "Until recently they were still just kids. But they are starting to become men, so we'll see how it goes."
Both sons are preparing themselves well for succession
During his apprenticeship in geomatics, Gian began to realize that the profession was a good fit for him: "It's been clear to me for a long time that I want to take over the company. I've also talked about it many times with my brother and it's clear for both of us that it's what we want." The business creates jobs and added value in their region, and Gian and Nico want to keep it in the family. They want to make sure that jobs aren't centralized or relocated abroad. The two young men are studying geomatics and civil engineering with an eye to their future. Nobody wanted to study business administration. "Our grandfather told us that we have business management in our blood, we don't need to study it," says a confident Gian.
Shares have not yet been transferred
The two sons are preparing well with their choice of studies but no shares have been transferred yet. This would mean that the decision has already been made and, according to their parents, it's still too early for that. First of all, they have to meet the demands of their academic studies, and see whether it suits them. "It's not something that should be taken for granted; both of the boys are very much enjoying their youth," says Regula Donatsch. In addition, all five siblings must be given the same chance. The youngest daughter is still in high school and doesn't yet know how interested she is in the company. Ultimately, they will definitely surrender the shares. But the questions of who, when, how and what are still open.
When should succession planning begin?
At first glance, the Donatsch family seems to be very relaxed about the subject. They believe that things will become clear with time and their succession will be handled on the basis of trust. A hard nut to crack from an expert's point of view? Insurance experts, of course, agree that it is generally never too early to begin the process of succession. They see it as their duty to make their customers aware of risks in good time and to show them what measures they can take to combat those risks. But there is no golden rule as to when succession should begin. Our Zurich expert is very easygoing about the succession plan for the company he advises. It's important that businesses don't make their entire existence dependent on the handover of the company.
The biggest mistakes in succession planning
The biggest mistake made by many SME business owners is that they repeatedly invest all their money in their company, for example in machines, and massively neglect their personal pension provision. "Entrepreneurs who are themselves at the BVG minimum have to get a lot out of the selling price." That entails significant risks: Many entrepreneurs believe that they can make a lot of money but this can be misleading. It is not always easy to find a buyer for your business – a problem that is unfortunately all too often underestimated. Entrepreneurs often stake everything on a young person. If that person backs out, they have no choice but to continue working until they find a new solution. But these dangers don't apply to Donatsch + Partner, which are already ideally positioned today.
Succession planning begins with the pension plan
When Georg Donatsch says that succession is more important than his retirement, he means his retirement from the company and not his financial situation. Because he has already made good provisions for himself and his employees. Two years ago, he and his wife spent a lot of time researching the subject and comparing several pension funds. They opted for the Vita model in January 2018. They also informed their staff about BVG, so they have already done a lot on the subject of retirement provision and security in advance. Regula and Georg are also thinking ahead in other areas. Georg Donatsch has other properties outside of the company and has also founded a holding company. "If the thing is too cumbersome, you can't hand it over." This means that the AG is quite easy to move around and the real estate can be easily divided among the five children without the company being affected.
Succession planning for Donatsch + Partner AG based on trust
The Donatsch family has not yet hired a consultant for concrete succession planning. At present, trust within the family and within management forms the basis for their company handover. "There is no better foundation than an honest and transparent relationship with family and business colleagues. Even if our sons change their mind we have backup solutions." Employees have also been openly asked how they would feel about Gian and Nico taking over the company. But it remains to be seen how it will all play out. Since the company has grown so much, new structures might have to be designed. For the time being it's mostly important that people speak openly and honestly – at the family table, in the break room and in the conference room.
Good advisors or lots of luck: you need one of the two
Although Georg Donatsch is a do-it-yourself man and doesn't want to be advised on every subject by an expert, he admits that insurance experts can be very valuable. "If you don't manage your own retirement planning and your financial risks, you're on thin ice." If he hadn't followed the advice he received, to hire himself at the company in 2006, when he took over the management of Lutz Schmid Ingenieure AG, which meant that he was insured against major blows of fate, the financial consequences of his stroke four years later would have been devastating. He was out for half a year and his wife Regula had to take over all of his responsibilities. Before this happened, Georg Donatsch believed that he did not need either a pension fund or a contingency plan. "I'll figure it out when I'm 65," he used to say. "But we would have been really unlucky if I hadn't been employed by the company, where my salary was insured against accident and illness as well as for occupational benefits. It was an insurance guy who talked me into it. Today I'm grateful to him for that."
If entrepreneurs want to allow themselves some time for succession planning, it is advisable to at least ensure their own retirement provision and cover financial risks such as death and disability.