Author of the article: Mariann Tál, Head of Executive Search and Direct Search Division, Prime by JobGroup
As the leader of Prime by JobGroup’s executive search division, I have encountered the issue of generational succession many times in recent years. We have supported well-known Hungarian family businesses in selecting the new generation or a new top executive, and we have also been invited by international companies to assist in CEO succession processes involving retiring leaders. In addition, in 2024, together with Opten and Corvinus University of Budapest, we conducted a representative market research study on the topic.
In Hungary, approximately 150,000 family-owned businesses are currently operating, producing nearly half of the country’s GDP. Around 40,000 of these companies were founded around the time of the political transition, which means that transferring the baton has now become timely: most founders have reached or are soon reaching retirement age.
Our experience shows that a well-planned succession process is time-consuming and complex. Ideally, a founder preparing to step back begins the process consciously — even 5–10 years before retiring — in their sixties. However energetic and active a company leader may be, postponing or avoiding the topic of succession can pose serious risks, especially if the process only begins in their seventies or eighties.
According to the literature, about 30% of family businesses do not survive a poorly prepared generational transition, and globally, only 3–4% make it to the third generation.
Stepping out of a company that one has founded and personally led is not only a business decision but also an emotional one. Founders typically hold a significant portion of the organization’s professional knowledge and key external relationships. The core question is how to transfer these assets smoothly while safeguarding the long-term interests of the company.
It is also essential to distinguish between cases where the founder acts only as owner versus cases where they also serve as the operational CEO. Succession solutions differ greatly depending on whether the company already has an external — non-family — executive, or whether all leadership roles are concentrated in one person.
At one long-established, highly regarded family enterprise, the retirement of a non-family CEO after 25 years and the family’s generational ownership transition happened in parallel. The family engaged external advisors for both processes. They intended to continue filling the CEO role with an external professional recruited from the market, giving us the opportunity to join the process as Executive Search consultants. The selection process for the new CEO began more than a year before the planned retirement, with careful consideration given to choosing the consulting firm.
After Prime by JobGroup was awarded the assignment, I personally participated in the selection process. Meanwhile, the family developed their own family constitution and engaged an experienced leadership coach to address the emotional and psychological aspects of the transition.
In this particular company, the younger generation had been involved in the operations from an early stage: they started in lower-level positions and gradually learned how different areas of the business function. As a result, taking over professional leadership and existing relationships posed no significant difficulties. A key factor was the older generation’s trust in their successors — including accepting that the younger generation preferred different management and leadership methods. It is often said that establishing a shared language between the “analogue” and “digital” generations is essential for a successful leadership transfer.
Naturally, the new leadership introduces organizational and strategic changes. To ensure these do not come as a shock to the organization, proactive communication, preparation, and employee involvement must begin early in the transition. This is crucial for maintaining employee loyalty.
In our study, nearly 700 Hungarian business owners responded to our questions. The companies examined typically had annual revenues of around HUF 1 billion and more than 20 employees. Regarding leadership succession, 68% of respondents primarily considered a family member, but 38% saw potential successors in internal employees, and 29% were open to selecting a well-chosen external expert. The most sensitive issues identified were trust and control, organizational restructuring, and changes in corporate culture. A less frequently mentioned but highly important factor was whether the retiring owner had a strategy for their own future role and for how they would use their newly freed time and energy.
Based on my experience, Hungarian business owners feel most secure when they can entrust their company to a successor who preserves the core values of the business and the family, while also renewing the organization and ensuring sustainable, prosperous long-term operations.
