Secrets Of Family Business Transition

ChartsStatisticsFamBizSm

Less than a third of family businesses transition successfully to the third generation.  70% fail or are sold.

Not quite 10% continue as active privately held companies for the third generation to manage.

It is our nature to think that a family business transition can be navigated by the founder and family without outside help (interference?).

Families are complicated, people are complicated, and business is complicated.  Combining personal, family and business decision making is exponentially complicated.

 

Disagreements within families spill into operational decisions within the business, creating tension and emotional behavior.

In times of transition it can be hard to see the forest for the trees.  When founders can’t quite let go and the next generation can’t abide waiting or seeing brother supplant brother (or sister) emotional behaviors can rule over pragmatism in the business wrecking performance, the company’s working environment, and profitability.

Perhaps a greater pain than the sale of a cherished family business happens when sons and daughters leave the company & do not return for holidays or family events because they felt abused (rightly or wrongly).

Suggestions to avoid bad decisions;

Appoint non-family mentors and listen to them

*Diligence in distinguishing between “family” decisions and “business” decisions and implementing strategies to know the difference.

*Adapt to change (don’t wait too long – start the process of discovery early)

*Manage family members entering the business (only committed and qualified family members need apply)

*Proper training and screening (no special accommodations – You Must Be This Tall (educated/old/etc) To Enter

 I’ve seen many happy, hardworking families and healthy companies torn apart by internecine warfare.

 

These practices from the Harvard business review and Cary Tutelman Family Business Advisor might smooth the path to being one of the 10% that continue into the third generation.

Continue the conversation at the Hill Library Oct 27th or request a short Packard Group webinar; mike@packardgroup.com

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