A question raised recently in our PraeCeps Business Circle stayed with me: what happens when the owner of an SME knows that the time has come to retire, sell or move into another role, yet continues to control almost everything?
Anyone who has worked closely with founder-led businesses will recognise the situation. A new managing director arrives, yet the founder still wants to approve the offers. A successor receives responsibility for the team, yet employees continue going directly to the owner. The founder says that people should take more initiative, then corrects decisions as soon as someone makes them differently. Eventually, everyone adapts.
Managers learn to wait. Employees learn whose opinion really matters. The successor learns that the title carries less authority than it appears to carry. The founder sees people taking less ownership and becomes even more convinced that the company still needs close supervision. A circle of dependency emerges.
Europe has a succession issue, although the deeper problem sits inside the company
Europe now has a demographic reason to take this seriously. In June 2026, the European Commission issued a new Recommendation on SME business transfers, replacing guidance that dated back to 1994. The Commission points to a growing number of SME owners approaching retirement without designated successors and warns that failed transfers can mean the loss of jobs, know-how and economic value.
The scale matters because SMEs themselves matter. The EU counted around 34 million SMEs in its 2025/2026 annual review. Family businesses alone account for more than 60% of European companies, and the Commission identifies early preparation for business transfer as one of their recurring challenges.
Older EU research gives some perspective on the magnitude of the transfer question. A 2020 European study estimated that roughly 450,000 businesses involving around two million employees were transferred annually, while approximately 150,000 businesses and 600,000 jobs faced the risk of an unsuccessful transfer. The researchers explicitly described those estimates as imprecise, which matters when quoting them today.
The European Economic and Social Committee subsequently made another observation that interests me more: transfers become particularly difficult in smaller businesses where the incumbent owner plays a dominant role. Here the succession problem stops being purely demographic, financial or legal. It becomes a leadership problem.
The founder created the system that now needs to survive the founder
Founders rarely become controlling by accident. Many built their companies precisely because they paid attention when others did not. They knew which customer would pay late, which employee could handle a difficult situation, which supplier needed pressure and which €50,000 investment could wait another six months.
For years, personal intervention created value. The organisation adapted around that capability. People discovered that asking the founder produced a faster answer than building their own judgement. Customers developed personal relationships with the owner. Important knowledge accumulated in one person’s head. Decisions travelled upwards because the system rewarded escalation. Success then reinforced the behaviour.
Thirty years later, someone tells the founder to “let go”. The phrase sounds simple from outside the company. From inside, letting go can feel remarkably close to neglecting one’s responsibility. The founder knows how much can go wrong. The successor does not yet know every customer, employee, technical detail or historical mistake. A founder who has spent decades preventing problems can easily interpret continued intervention as stewardship. Yet a strange thing happens when stewardship never changes form. The founder begins protecting the company from the very independence that the company needs to survive.
When nobody is quite sure who runs the business
Formal succession can happen surprisingly quickly. Shares can change hands. Boards can appoint CEOs. Lawyers can define governance structures and accountants can value the company. Informal authority moves much more slowly.
Imagine a founder who appoints a new CEO and then attends every management meeting. Nothing looks particularly wrong. The founder has decades of knowledge, and excluding that knowledge would make little sense.
Then a commercial decision comes up. The CEO makes a call. The founder disagrees and contacts the sales director afterwards. Next time, what will the sales director do? The rational response is obvious. The sales director will wait until the founder’s view becomes clear.
No governance document needs to change. One intervention has already taught the organisation where power still sits. Repeat the pattern often enough and the successor can become responsible for results while lacking the freedom to create them. At that point, micromanagement creates more than frustration. It distorts the operating system of the company.
The trust problem behind the succession problem
A recent conversation with Dr Daniel Stanton for Where WeLevtov gave me a useful lens for thinking about this. We were discussing trust in supply chains when Daniel defined trust as choosing vulnerability in a risky situation. He then made an observation that stayed with me: if trust means accepting vulnerability, the alternative becomes control. Organisations introduce controls because controls reduce exposure, yet every additional control carries a cost.
The same logic applies surprisingly well to succession. Handing over a company requires vulnerability. The successor may negotiate differently. A new CEO may hire someone the founder would never have hired. The next generation may discontinue a product carrying enormous emotional history. A buyer may change the organisation. A management team may make a decision that fails. Control, of course, offers protection from those possibilities. It also makes genuine succession impossible. Here lies the paradox. An owner may genuinely want the company to become independent while repeatedly behaving in ways that preserve dependence.
The founder asks for initiative and intervenes when initiative produces an unfamiliar answer. The founder asks the successor to lead and remains available as an alternative authority. The founder wants employees to grow and continues solving the problems through which they would have learned. Nobody needs bad intentions for the system to fail.
Perhaps the uncomfortable question concerns identity
Business succession literature understandably spends enormous attention on tax, financing, inheritance, valuation, buyers and legal structures. The Commission’s 2026 Recommendation also focuses heavily on creating better conditions around these areas, alongside awareness, training, financing and digital matchmaking between buyers and sellers.
Yet I wonder whether some of the hardest transfers fail much earlier, in a place that no tax structure can solve. Who am I when nobody needs my approval tomorrow morning? For someone who has spent twenty or thirty years as “the person who knows”, retirement involves more than stopping work. Ownership may have provided professional identity, social status, relationships, intellectual stimulation and a sense of usefulness at the same time. A successor then represents continuity for the company and discontinuity for the founder.
Seen from that perspective, controlling behaviour becomes easier to understand, although understanding it does not remove its organisational consequences. Perhaps the owner does not need another succession checklist. Perhaps the owner needs to imagine a future identity with enough substance to make leaving the old one possible.
A company can look transferable long before it becomes transferable
Consider two businesses with similar revenues, margins, customers and market positions. In the first company, employees know that the owner will eventually decide anything important. Senior managers bring recommendations rather than decisions. Major customers call the founder when something goes wrong. The founder can take a holiday, although everyone knows that the phone remains on.
In the second company, leaders occasionally make decisions that the owner dislikes. Customers know several senior people. Teams resolve many problems before the founder hears about them. The owner sometimes discovers an important decision after the company has already made it.
Which situation would feel more comfortable to an entrepreneur who spent decades building the business? And which company has actually learned how to survive the entrepreneur? The difference has little to do with whether the founder has completed a succession plan. It reveals whether the organisation has started developing a life of its own.
Maybe succession starts when the founder stops being the answer
Founders often take pride in becoming indispensable, and for good reason. During the early years, indispensability can keep a young company alive. Maturity asks for something different, i.e. a mature organisation needs knowledge beyond one person’s memory, relationships beyond one person’s network and judgement beyond one person’s instincts. Leaders throughout the company need enough space to make decisions, experience consequences and become credible in the eyes of employees and customers.
The process will contain mistakes, but the founder made mistakes too. Time often turns those mistakes into experience and eventually into the very judgement that makes the founder so difficult to replace. A successor cannot acquire thirty years of judgement while somebody else continues making every difficult decision.
The last company a founder builds
Perhaps we should therefore think differently about the final stage of entrepreneurship. The founder spent years building products, customer relationships, teams, processes and market position. Eventually, one final piece of architecture remains: a company that no longer requires the founder at its centre. Building it may feel deeply counterintuitive because progress starts becoming visible through absence:
A meeting might work without the founder, or a customer chooses to call the new CEO. Moreover, a manager makes an important decision without seeking permission. Someone solves a problem differently and the solution works. The founder hears about an issue after the team has already resolved it. Each moment can feel like a small loss of relevance. Collectively, they provide evidence that the business has become stronger.
Daniel Stanton’s point about trust and control offers a useful final perspective here. Control reduces vulnerability today. Trust creates the possibility that another person develops the capacity to carry responsibility tomorrow. For an SME owner approaching succession, the hardest question may therefore have little to do with finding the right buyer or successor.
The harder question asks whether the founder can tolerate watching the company succeed in ways they would not have chosen themselves. A founder’s final leadership achievement may come when the company stops proving how much it needs its founder and starts proving how much the founder has enabled it to become.