„Dad/Anya, we don't do it like that anymore!” - Successful ownership generation change and the role of coaching in Hungarian SMEs
Estimated reading time: 10 minutes
The Change of Ownership Generation
A change of ownership generation in the case of Hungarian SMEs, it is the critical and often emotionally charged process whereby the founder-owner - who typically started his business around the time of the regime change and is now reaching retirement age - hands over ownership and operational management of his company to the next generation, usually his own family members. This move goes far beyond a simple administrative or legal transaction; it is also a succession of a „life's work” built up over decades, a strategic, psychological and cultural shift. It involves testing the ability of the founder to let go, preparing and motivating the successor, and aligning the (often divergent) mindsets and working styles of the two generations, all to ensure a successful future for the company.
Why is the change of ownership often stuck in the case of Hungarian SMEs?
A change of ownership generation perhaps the most difficult and risky period for Hungarian SMEs. Far from being just a legal or administrative handover, it is an emotional, psychological and strategic storm where generations, different work ethics and family roles collide. Most family business succession is stuck because the founder cannot let go and the successor cannot (or does not dare) go his own way. In this situation, the generational change through coaching building bridges: helping to speak the unspeakable, translating the „language” of generations to each other, and ensuring that the oeuvre is not lost but successfully transformed.
The Family Lunch Where Your Life's Work Matters
Imagine Sunday lunch. There sits Istvan, 68, the founder of the company. He built his 80-strong manufacturing company from scratch. He knows every machine, shakes hands with every worker. Opposite him is his son Gábor, 40, with an MBA. Gábor sees the opportunities of digitalisation and new markets, but also that his father's methods - while they have worked until now - are becoming obsolete.
István: „Gábor, I have seen the quarterly plan. Why do you want to push this CRM system? It worked on paper for 30 years.” Gábor sighs: „Dad, we don't do it like that anymore! We can't grow if we can't see the data. The competition is passing us by.”
Silence. István feels resentment („My son looks down on what I did”) and Gábor frustration („Dad doesn't trust me”). Neither of them says what they really feel. István says: „I'm afraid that what I've built up, you'll destroy. And I'm afraid of what will happen to me when I'm no longer the boss.”Gábor said, „I respect you, but I need the space to put something on the table. I don't want to live in your shadow.”
This scene is played out thousands of times in Hungarian SMEs. A change of ownership generation does not fail on Excel spreadsheets or contracts, but on the on unspoken sentences, or even judgements that are too strongly pronounced.
Why is the change so painful? The Real Problems Under the Carpet
When a company is run by the same person for decades, his or her personality becomes one with the company. He is the „Father”, the „Boss”, the „All-rounder”. A change of ownership generation this identity would have to be detached from the company, which could be experienced almost as a grieving process.
At CoachLab, with decades of leadership and more than 10 years of coaching experience, we see that Hungarian SMEs family business succession they face the same challenges:
- The „Founder Syndrome” (Inability to Release): For the founder, the company is his „child”. How can he pass it on to someone else? Even if that other person is his own child. Often, even after the handover, there is still a „shadow steering”, with the founder continuing to come in and give instructions, undermining the authority or self-worth of the new manager.
- The „Other Language” (Generation Gap): For the founding generation (Baby Boomers or X), work equals life, with time in the office and stable profits as the measure of success. The successor generation (Y or Z) thinks differently: it's important to purpose (goal), flexibility, digitalisation and work-life balance. When they talk, they use the same words, but they mean something completely different.
- The Unmotivated or Unprepared Successor: A very common situation; what if the child doesn't want to? He may have a different career path, different interests, or simply see how stressful his father/mother's life has been and does not wish it for himself. Worse still, he may take it on, but only out of a sense of duty, without any real commitment or vision. This leads to the slow death of the company.
- The Mixing of Family Roles: „Are you the boss or my father?” Still father-son at lunch, now owner-manager at the office? These roles inevitably become blurred, and a business dispute can easily turn into a personal grievance that paralyses decision-making.
The Coaching Bridge between Generations: how do we help you make the transition?
When the tension is already palpable and the change of ownership generation seem to be stuck, most people turn to a lawyer or financial adviser. But the problem is rarely legal; always human.
This is where generational change comes in coachinggal and organisational development. At CoachLab Coaching Services, we do not give financial advice or write succession plans. We go deeper than that: we help our stakeholders can write their own plan and be able to implement it.
What does this look like in practice?
1. The Mirror (Clarifying Real Goals): An leadership coaching generational change the first step is always to talk to them individually. An experienced coach (such as Róbert Radó from our team, who has been through several such processes) helps the founder to articulate what he or she is afraid of actually. What is his vision for the company and by himself about the future? We do the same with the successor: what does he want ő? Do you even want to? If yes, how? This clarity is key.
2. The Translator (Finding a Common Voice): Once the individual goals are clear, the joint, moderated sessions can begin. The coach is not a judge here, but a „translator”. He helps to translate the founder's „language of concern” for the successor and the successor's „language of innovation” for the founder. We help to set a framework where the parties can talk about their expectations and fears without judgement.
3. The Designer (Structuring the Process): The succession coaching not just talk. We break the process down into concrete, measurable steps.
- When is the handover taking place?
- What in phases? (e.g. year 1: successor learns; year 2: joint decision making; year 3: founder becomes advisor).
- How to communicate this to the team?
- At will be the new role of the founder? (This is critical! He needs a new, meaningful role, otherwise he can't let go of the old one).
4. Preparing the Organisation (Organisation Development): A change of ownership generation is not just about two people. The whole organisation suffers when there is uncertainty. The „old guard” is loyal to the founder, the „new people” support the successor. This can tear a company apart. So we extend coaching for organisational development is:
- Team coaching sessions for middle managers.
- Workshops to develop a new strategy and culture.
- Strengthening internal communication so that everyone understands what is happening and why.
From the CoachLab Experience:
The case of the two-generation IT SME
We worked with a second generation family business of 100+ people after the founder asked for help. The founder (let's call him John) was over 65, but he wanted to run „everything IS”. His two sons worked in the company, both over 35, but were still „the boys”. The sons were modern and skilled, but they could not thrive in their father's shadow, which led to constant conflict. The company stagnated, key people started to leave.
Róbert Radó and the CoachLab team engaged with them in a complex process lasting more than a year.
- Phase 1 (Diagnosis and Individual Coaching): It turned out that John was terrified of „retirement” and did not trust that his sons were „tough enough” to drive. And the boys were tired of their father overruling their every decision.
- Phase 2 (Joint Moderated Sessions): In these meetings, with the help of the coach, they were able to voice the real problems for the first time. John shared his fears and the boys presented their own, well thought out vision.
- Phase 3 (Organisational Development): We set up an „advisory board” for John, where his experience was golden, but he no longer had a say in day-to-day operational matters. The boys were given clear lines of responsibility (one for service and production, one for sales).
Result: A change of ownership generation was successfully completed. John is now enjoying the fruits of his labour as a „senior consultant”, and the company has opened up new markets under his leadership. But to do this, they needed an outside, objective party to help bridge the emotional gaps.
Global Outlook: not just a problem for us
A family business succession difficulty a global phenomenon. International surveys confirm that this is one of the biggest challenges facing businesses.
A Harvard Business Review (HBR) is a regular contributor on the subject. One of their articles („Why Family Businesses Need to Find Their Purpose”) stresses that family firms are the ones that can successfully change hands, where succession is not just about transferring assets, but also about its purpose (purpose) can be redefined for a new generation.
A Forbes in another article („The Missing Ingredient In Most Family Business Succession Plans”) suggests that 70% of plans fail because they focus only on the „hard” factors (finance, law) and completely ignore the „soft” factors: trust, communication and emotional preparation. This is precisely the area where generational change through coaching is most effective.
Is Your Company Ready for Change?
5 Step Food for Thought
If you know yourself in any of the above situations, either as founder or successor, you can change of ownership generation process should not be delayed. The longer you wait, the harder it will be.
Here are 5 questions to start you thinking:
- The „Why?”: As a founder: why do I want to pass it on? (Just because I „have to”, or because I want my life's work to live on in a renewed way?)
Successor: Why do I want to take over? (Out of obligation, or because I have a real vision?) - The „With whom?”: Do you have a designated successor? Ő indeed is it suitable? And more importantly: wants? Did you talk about this honestly?
- The „When?”: Is there a specific date? Or just „someday”? „Then” is the most dangerous word in the family business succession during. We need a timetable.
- The „How?”: What are the stages of the transfer? What knowledge needs to be transferred? What will my new role be after I have taken over?
- The External Eye: Can we see that you can't do it alone? We dare to ask for help from an outside, objective party (like an coach or organisational development), who is not a family member and has no emotional attachments, so you can see the situation clearly?
Closing Thoughts: the Art of Letting Go and the Promise of a New Beginning
A change of ownership generation a marathon, not a sprint!
It is full of difficult conversations, resentments and fears. But it doesn't have to be.
In our view the key to successful change not the perfect contract, but the ability to communicate honestly and let go. The founder has to let go of operational control, and the successor has to let go of wanting „everything to be different immediately”.
An Executive Coaching process helps you do just that. Helping the founder find new meaning in the company next to and for the successor to build his or her own leadership identity without denying the legacy.
A change of ownership generation can be a painful end, but it can also be an exciting one, a new beginning is.
It's up to you!
Are you ready to make the generational change not a chaos, but a successful new chapter in your company's life?
Let's talk about where you are now, and how we can coachlab.hu/en/-help bridge the generation gap.
FREQUENTLY ASKED QUESTIONS (FAQ SECTION)
Much sooner than you think! Experts say the ideal is to start the first conversations 5-10 years before the planned handover. Generational change of ownership is a long process that involves grooming the successor, transferring knowledge and preparing the market. If you rush in at the last minute, conflict and loss of value are almost guaranteed.
Because no one in the family is objective. Family members are fraught with emotional grievances, unspoken expectations and role conflicts (e.g. „are you saying this as my father or as my boss?”). An external coach (like the one from the CoachLab team) is emotionally detached and focused only on the success of the process. He or she is able to moderate difficult conversations and set a framework where everyone can speak their mind without judgment. He is the „translator” between generations.
This is one of the most difficult but most important realisations. Coaching can help to clarify whether your successor really doesn't want to do the job, or is just afraid to do it, or would do it differently. If it turns out that there really is another way, the generational change of ownership can still happen, but in a different way: for example, by bringing in an external professional management team (as long as ownership remains in the family) or by selling the business. The worst thing you can do is to force the company on someone who doesn't want it. That will mean the end of the company.
No. Although the focus is on the founder (transferor) and the successor (transferee), the process affects the whole organisation. Key people, middle managers and members of the „guard” may also experience uncertainty. To whom should I be loyal? What will my role be? That's why the succession coaching process is often complemented by team coaching and workshops to ensure that the whole team can smoothly embrace change.
