My close call came when a dying entrepreneur wanted to transition his business to his drug using oldest son. His heart was in the right place, but the business decision would have been fatal to the company.
The key employees quickly stepped forward to tell the owner that it would be the end of their employment if this happened.
The son’s behaviors had been onerous – there was no other way to keep the business in the family. It sold quickly, to the benefit of all involved (especially the oldest son).
When a family business suffers the loss of its key entrepreneur, change will happen quickly. If succession planning was done wisely and well the transition can go smoothly and risk is greatly reduced.
Too often, death or disability of the owner is unplanned and human nature and the harsh reality of commerce throw a business into chaos as family members disagree over the critical decisions that must be made for the company to survive.
Success lies in guiding your family business clients to see the importance of timeliness and best practices. Even the best businesses can’t avoid the injury of severe management dysfunction as siblings battle over management and money. Failure is hard to avoid when emotions and disagreement steer a business in the wrong direction.
We counsel our clients to work with a professional family business consultant (yes, they do exist) and recommend a book that advises wise business transition, by Cary Tutelman;
The Balance Point: New ways business owners can use boards (Famille Press, 2008). http://www.famillepress.com/
For those businesses that need to be sold, we recommend time specific marketing, which is an industry specific approach to transferring a business at a fair price in a rapid manner (we offer as part of our profiling and research service).
Timing is important to a business that has lost the glue of its entrepreneur. Having someone on hand to guide the business into the next generation or transfer will greatly lower the risk of failure.
Comment here with your stories of how business transition/transfer have been executed well or poorly.
Your experiences can help others from learning the hard way.