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Succeeding in a generational change

Are you facing a change of ownership and succession of generations? Maybe this is something you've been thinking about for years or an idea that came up in connection with a major change in the company. For the Kvistberga family business, a major change suddenly became an opportunity when the next generation chose to keep running and develop the company.

Syskonen Fredrik Lingons och Sophie Pettersson
Siblings Fredrik Lingons and Sophie Pettersson had clear roles in the family business even before they took over ownership from their father. Pia Norlander, BildN.

The siblings Fredrik Lingons and Sophie Pettersson now run the company Kvistberga Group AB, which produces, sells, and installs ramps and various accessibility solutions. The company was started by their father Göran Karlsson in the mid-80s, and the siblings grew up with the business. It was not uncommon for customer meetings to take place at home over dinner or for the siblings to accompany their father to trade shows and run around the booth. But it was never a given that they would start working at the company, let alone take over the business.

"He (Göran Karlsson, ed. note) never thought we would take over. It has never been his goal. But due to circumstances, right decisions, the company thriving, and us being part of the whole journey, we found our way forward. We have lived with entrepreneurship through both ups and downs," says Fredrik Lingons, sales manager at Kvistberga.

Originally, Fredrik Lingons was trained as a concrete worker, but due to a tough situation in the construction industry in the 90s, he started working as an intern in the family business. A few years later, his sister Sophie Pettersson also started working in the business. Today, Fredrik is the sales manager and co-owner along with his sister, who is the CEO of the company.

Fredrik is the oldest of the siblings, but it was never discussed that he would become the CEO because of that.

"When dad wanted to pass on the CEO role, he asked both of us. But both my sister and I laughed until we cried when he asked me - because it wouldn't work. We have clear roles; I should be out talking to customers and Sophie keeps track of everything and handles all things administrative. These roles have been established since Sophie started at the company," says Fredrik Lingons.

Close down or start over?

When Göran Karlsson started the company, it was a sales company with a part-ownership in a manufacturing industry. However, in 2010, the companies chose to part ways, and as a result, he did not want to continue running the company.

"My sister Sophie and I spent many nights discussing what we should do. We didn't know how to move forward, but we were in complete agreement that Kvistberga's journey should not end here. The problem was that we didn't have a manufacturing unit. We had no factory or production," says Fredrik Lingons.

However, they found a location in Ramnäs outside Västerås and started producing on a small scale themselves. Thanks to the strong brand, the extensive network built up over the years, and a lot of determination, they quickly got back on their feet. Throughout the transition, their father remained in the background.

"He didn't want to stay in the company, but you can't throw away his experience. He has sat on the board and been there on the ground when we started over, and he has been an invaluable asset on our journey, and we have benefited from his knowledge," says Fredrik Lingons.

Dare to evolve after a generational shift

After the business transitioned from a sales company to being both a sales and production company, Kvistberga continued to evolve, and today they have more products and services than when the siblings took over the business. The company now has 10 employees and operates in both the Swedish and European markets.

Until last year, their father sat on the board and contributed his knowledge and input.

"It has been a very good ending. He hasn't stood over our shoulders but has stepped down and been there when we asked for it. That has been his greatness. When he let go, he let go. I have heard from friends and acquaintances that it's not always like that during a transition," says Fredrik Lingons.

One of the biggest challenges of the generational shift, according to Fredrik, has been to trust oneself and realize that you don't need to do things exactly the same way as the previous generation. For those contemplating or undergoing a generational shift, he wants to advise them to dare to break away from established patterns.

"Don't stay in mom's or dad's footsteps, dare to let go a little. It takes a while before you get there, but when you do, it's very liberating," says Fredrik Lingons.

To distinguish between family and business more easily, he believes in having effective board work with an external chairman, something the siblings chose to implement after taking over the company.

"Since we have been a family business for all these years, board meetings have often felt like a Sunday roast at mom's. And that's both positive and negative. Therefore, we started quite early with an external board. To know what we should focus on instead of getting emotionally involved in things," says Fredrik Lingons.

His advice also includes daring to talk about the generational shift and the future within the family, as well as starting to prepare in advance. Identifying the necessary skills and involving those who will take over is important. He believes that they had a significant advantage during their generational transition because the siblings were already involved in significant parts of the business for several years.

"You might have an industrial company where the son stands and operates machines all day. There's a huge difference between operating machines and running a business. So, dare to talk about it even if it can be a touchy subject," says Fredrik Lingons.

Expert advice: Start early and be open

With an increasingly older average age among Swedish business leaders, many companies in Sweden are facing impending ownership and generational shifts. However, many underestimate the time and planning required to carry out a shift.

Many of the challenges and advice that Fredrik Lingons highlights resemble those that experts mention when discussing generational shifts.

In Kronoberg County, business leaders have a high average age, something that Almi Företagspartner in Kronoberg notices as they often receive questions about ownership and generational shifts.

"We often receive questions about financing and about how the company should handle the transition itself. However, we do not provide advice on generational shifts; we refer to business lawyers. Nevertheless, we regularly hold seminars and workshops where business lawyers participate, and entrepreneurs are invited to gain more information on the subject," says Kristina Engström, advisor at Almi Företagspartner Kronoberg.

Many questions from entrepreneurs revolve around how to get started and how to handle the sensitive issues of fairness when it comes to generational shifts within the family.

"One of the most important things is for the company to start planning early. Our experience is that it takes longer than expected. And it's not uncommon for it to take several years. And let the process be open, something particularly crucial within family businesses. You should remain friends even after the generational shift is complete," says Kristina Engström.

In addition to adequate time for planning, she recommends seeking help from experts such as accountants and business lawyers at an early stage to explore the various possibilities available during a generational change.

"A crucial question for the transferor to consider is what is most important: getting as much pay as possible or ensuring that the successor has the best possible conditions to continue running the company. This does not necessarily have to be a contradiction, but it can be," says Kristina Engström.

Preparation is Key

Being well-informed and aware of the possibilities available can be a good way to start a generational shift. The tips and advice provided by Kvistberga and Almi are examples of what to consider before a shift. More information from authorities on ownership and generational shifts and what applies to different types of companies can be found on verksamt.se. The service "Find advice and financing" is available where entrepreneurs can find contact information for advisors to progress in their business endeavors.

Read more about change of ownership and succession of generations

Find advice and financing

Five things to consider in a succession of generations:

  • Involve the whole family in the ownership shift so that everyone can express their opinions.
  • The one taking over the leadership needs suitable education. Working in another company for a period can provide valuable experience.
  • Let the next generation get to know the different parts of the family business before takeover, for example, through a trainee program. A mentor who is not part of the family can also be of great help.
  • Differentiate between ownership and operational management. Interested children can very well take over part of the ownership without taking on operational roles in the company's management.
  • If you stay in the company after the ownership shift, it is important that you can interact constructively with your children in their new roles as owners and/or leaders.