German family firms confront succession gaps and push for diversification

Many German family businesses invest heavily in machinery, digitalisation, and growth projects, yet they often assume their next generation will automatically develop the necessary entrepreneurial skills. The articles argue that relying on proximity and time is a major mistake; successful entrepreneurs are deliberately cultivated through decisions, experience, and structured development, not left to “grow” on their own.

As these firms mature, robust core performance can become a strategic risk. Concentration on single products, markets, or key customers makes them vulnerable to technological disruption, regulatory changes, or economic downturns. To safeguard accumulated capital, owners are urged to diversify – either by expanding vertically or horizontally, building a portfolio of minority or majority stakes in unrelated sectors such as technology, health, or energy, and adopting new governance structures capable of managing investment decisions distinct from core operations.