Birkenstock: Exit the Family. Enter a Professional CEO

The case is about Birkenstock, the renowned German shoemaker, and two turning points in
its 248-year history: the owner’s decision to bring in a professional CEO in 2012, and the sale
of a majority stake to a French-American investment firm in 2021. Founded by German
cobbler Johann Adam Birkenstock in 1774, the company had always been 100% owned by
the same family and managed by a single descendant, a tradition upended in 2002 when Carl
Birkenstock, the CEO and owner, handed over his shares and job to his three sons. Ten years
later, unable to agree on strategy and with tensions rising in the family, the brothers decided
to bring in a professional CEO to put the struggling shoemaker back on its feet. Under the
new manager, sales of Birkenstock sandals increased to such an extent that the company
attracted the interest of investors. Meanwhile, one of the sons sold his shares to his two
brothers, who then instructed the CEO to find a buyer. Offered the opportunity to become
billionaires overnight, they sold the company to a private equity firm backed by the world’s
largest fortune and owner of LVMH, Bernard Arnault.

The case illustrates two phenomena that are common to longstanding family firms: the arrival
of a professional CEO and the exit of the family owners. What makes the case a powerful
teaching tool is that both events turned out surprisingly well for the Birkenstock heirs and the
professional CEO. In the first instance, the Birkenstock brothers were mired in internal
conflicts including a lawsuit against an ex-wife. They hired a professional CEO, Oliver
Reichert, and teamed him with a veteran executive until he could act on his own. Reichert did
such a good job that the firm attracted the interest of third-party investors. This had a knock3
on effect on the value of the business, prompting the heirs to sell a majority stake to a private
equity firm backed by Bernard Arnault. As one of the conditions of the billion-dollar deal, the
CEO got to keep his job. The case offers instructors a wide palette of topics to choose from,
including family succession, internal family discord, professionalization, and the sale of a
family business.