Entrepreneur roundtable:
Succession planning
Bobst Group, founded in 1890 in Lausanne, is the worldwide leading supplier of
equipment and services to packaging manufacturers. Jean-Pascal Bobst, Group CEO
and a great-grandson of the founder, talked about the history and organisation of this
extraordinary family business.
This roundtable of entrepreneurs started off with a
fascinating tour of the Bobst plant and their state-of-the
art machinery and technology. The visit ended with an
impressive demonstration of two machines furiously cutting
and gluing cardboard boxes at a production rate of 200,000
an hour.
The most noticeable characteristic of Bobst is their spirit
of innovation. Whether in new advances in technology or
operational improvements, Bobst is always at the forefront of
developments, capitalising on Swiss quality and know-how.
Once the visit was complete, the roundtable discussions
got underway. The entrepreneurs were very interested in
hearing more about the “Bobst saga” and the transition of
control within the company. Jean-Pascal Bobst began by
outlining the company’s history, highlighting the period
of financing by the Mercier and Rüttimann families between
the years 1935 and 1940. Business boomed under the
leadership of Henri Bobst, Jean-Pascal Bobst’s grandfather,
followed by Bruno de Kalbermatten and then Jacques Bobst,
Jean-Pascal Bobst’s father, who unfortunately passed away
at 56. Jean-Pascal Bobst joined the group in 1994, earning the
trust of the Rüttimann, de Kalbermatten, Mercier and Bobst
families over the years. He was subsequently appointed CEO
of Bobst Group in 2009, at a time when the company faced its
greatest challenges in the midst of the sub-prime crisis and
the ensuing recession.
Succession planning became a priority in the late 1990s,
when the de Kalbermatten, Bobst, de Preux and Rüttimann
families began looking for the most appropriate means of
transferring the company’s wealth and human capital so as
to safeguard the group’s growth and long-term future.
So it was that the fourth generation set up a family holding
structure in 1999 with a view to splitting operational and
financial control. The holding company has some 30 family
members as shareholders, a third of whom are fourth
generation. It operates as a board, holding 47% of the group’s
shares, listed on the stock exchange.
Entrepreneur roundtable: Corporate succession | May 2011
“I believe the family legacy is even
more important than any financial
legacy. Founding this holding
structure has really strengthened
our family bonds.”
Jean-Pascal Bobst, CEO de Bobst Group
Jean-Pascal Bobst went on to explain
that the shareholders’ agreement
underlying the holding company
sets out the conditions for any family
shareholders wishing to leave the
structure, as well as their rights
and duties, so as to ensure a solid
shareholder base. The family board
decides on allocation of dividends and
reinvestments in the company, which
has an enormous impact on Bobst’s
long-term vision. “While shareholders
of a public company tend to take a
short-term view of their investments,
family shareholders are in for the
long haul. I believe the family legacy
is even more important than any
financial legacy. Founding this holding
structure has really strengthened our
family bonds, as I need the trust of all
the different family members if they
are to hold onto their investments,”
said Jean-Pascal Bobst.
Two family meetings are held a year
to present an update of the group’s
operations. In addition, there is a
special one-day event for young family
members aged between 16 and 30.
There is also a separate day for older
family members, during which the
CFO hosts a business lunch similar
to financial analysts’ presentations.
“My intention in creating the special
day for young family members was
to instil in future generations the
importance of family at Bobst. I also
wanted them to realise they can define
their own role in the organisation,
according to their individual skills
and ambitions. My priority today is
unity and transparency. This approach
has enabled us to avoid any form of
conflict since setting up the holding
structure over 10 years ago,” said JeanPascal Bobst.
One of the guest entrepreneurs
responded by expressing his
admiration for the holding structure
and agreed with the importance of
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a unified family, which acts as the
company’s driving force. He expressed
his own frustration, to a certain extent,
at not having such a structure to
support his company. He currently
employs 950 people and expects this to
increase to 1,200 within the next three
years, when succession planning will
become an issue. He said he felt a lack
of support and was somewhat alone in
this way of thinking, and he pointed
out that he would find it particularly
difficult to have to sell his company to
an outside buyer.
Another business owner joined in and
shared some of his own experience.
He said he was part of the third
generation of a company founded
in 1908 and that his father had been
preparing him since childhood
to take over the company’s reins.
Unfortunately, he soon realised that
running the business was never
going to be his passion and so, after
managing and growing the company
for a number of years, he decided
to sell it. He said he felt pressurised
into running the company and would
have preferred to have been allowed
to choose his own career path. This
Entrepreneur roundtable: Corporate succession | May 2011
prompted another company manager
to say that she had made the opposite
mistake. She was part of the second
generation and thought it best to
let her children decide on their own
futures. She said that her children
chose different career paths and that
she now regretted not having involved
them more in the family business.
However, much to her great relief, her
grandchildren have now joined the
family business and are working in
management positions.
“There are models for handing
down a company without having to
involve one’s children while still
maintaining a family structure.”
Jacques de Saussure, Senior Partner,
Pictet & Cie
It was then the turn of Jacques de
Saussure to speak, pointing out
that there are models for handing
down a company without having
to involve one’s children while still
maintaining a family structure. He
described the Pictet succession model,
a judicious combination of family and
non-family members.
He believed the most important
element was that the owners of the
company should work there. This
is why Pictet Bank is organised as a
limited partnership, handed down
from one generation to the next.
As the age gap between two
generations is often around 30 years, a
father-to-son transition tends to raise
problems of both age and experience.
It is thus important to choose owners/
managers of all age groups and to
give the youngest among them an
opportunity to acquire the knowledge
they will one day pass on. When it
comes to electing a new partner, any
existing partners directly related to a
prospective partner are not included in
the voting or debate on that candidate.
At Pictet, one of the keys to success
in the transition process is the choice
of partners, who are often but not
necessarily members of the family.
Much discussion followed on this
topic, with another entrepreneur and
venture capitalist commenting that
the last thing he would want to give
his children would be a company. He
said he would prefer his legacy to be
in the form of knowledge and values,
leaving them to carve out their own
careers. Jacques de Saussure pointed
out that his father had also presented
succession as a “possibility” but by no
means his destiny.
Jean-Pascal Bobst added that he too
would have been quite happy to
specialise in a scientific field without
necessarily running the company.
Like Jacques de Saussure, he also
worked his way up, gradually taking
on more responsibility before taking
over the reins.
As the discussions came to a
close, another entrepreneur in the
construction business spoke about
the choices he made. He said that,
now he was retired, there was no
need for him to be on site but that his
daughter and son-in-law, who now
run the company, had asked him
to stay on for another year. He was
initially surprised when his daughter
wanted to join the company, though
he said this was probably because she
had been exposed to the construction
business from a very young age, often
visiting building sites with her father
on a Sunday. She was never forced to
join the business; she just took to it
quite naturally. He added that much
of the company’s current success was
due to his son-in-law, with whom he
said his daughter forms a formidable
couple.
Key criteria for succession planning
•No successor will be just like us, and we have to accept this.
•The successor should be given complex tasks to perform and a
team of people to manage, to evaluate his or her skills and capabilities.
•All details about the succession must be defined before starting the process.
As the time came to wrap up the
roundtable, a certain degree of
dissatisfaction was palpable among
the entrepreneurs present. Was this
the price to pay for being a successful
entrepreneur? In trying to make the
right decision, will we always think
that the other route might have
been better?
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PICTET & CIE
One of the business leaders concluded with what he
felt was the reason behind this sense of frustration:
“Entrepreneurs often confuse company management
with their family legacy. A company can still be part
of a family’s legacy, broadly speaking, without the
family actually being involved in the day-to-day
running of the business.”
With this roundtable, Pictet & Cie brings together a group of
entrepreneurs to discuss matters concerning them directly.
The objective is to create a community of interests in which
some of the leading players in the business world share
their experience, producing added value for all participants.
These meetings with entrepreneurs are thus held at regular
intervals on a different specific topic each time.
The discussions continued into the evening over a
very enjoyable dinner, served in the factory itself, in
the middle of all the machinery.
Entrepreneurship lies at the heart of Pictet’s values. The
bank, organised as a limited partnership, is owned and
managed by eight Partners who share joint and unlimited
liability for its commitments. The Partners thus act as
managers, shareholders and the board of directors. With
this entrepreneurial spirit forming the basis for its growth,
Pictet & Cie currently has almost 3,000 employees, 20 offices,
and assets under management and custody of CHF 365
billion (end-June 2011). It is also ranked among the largest
independent asset management institutions in Europe.
Text: Francine Jacquemet
Photograph: Jean-Luc Cramatte
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Entrepreneur roundtable: Corporate succession | May 2011