Challenges and Benefits of Sibling-Consortium in Management of Family Enterprises

When asked to describe how German business owners and their families “organize” the succession, the first comment to be made is: The pattern has been changing over the past two generations significantly. The concepts for the transfer of ownership can only be interpreted against the background of legal regulations and cultural traditions. In the nineteenth century, one standard concept for the transfer of any businesses was: The ownership of the whole company or at least the majority of the shares was transferred to the eldest son as a matter of course. Thereby the business owners copied the will practice of many noble families. The transfer to the eldest son was a common practice among noble families for generations—however only in certain regions in the world, i.e., Northwest Europe and Japan. In these regions the power of the noble families was based on the size and productivity of the farming estates belonging to the area they ruled over. It was necessary to maintain the productivity of the farms by avoiding the split up of the land among many heirs. In other regions, different practices prevailed. In Russia and India, all sons were the heirs of land and business. In the Arabic region, all descendants had to share the assets. Also in the countries which had to assume the law of the French emperor Napoleon (Code Napoleon), it was mandatory that the assets of a family were transferred to all children in equal shares.