Transitioning the Family Business
For a successful transition, one of the critical pieces is giving voice to the concerns of those involved. There are many options in transitioning a business, ranging from a sale of the business to non-family, to gifting some or all of the business to family. To successfully navigate the transition, family leaders must work hard to preserve family relations, family culture, and viewing this as a journey and not a single event.
The decision process for the transition, requires consideration of several key areas:
- Interest of the next generation: What is the true desire of the next generation? Do they want to lead the family business?
- Skill set of the next generation: If the next generation has an interest and desire to keep the business in the family, what do they need to learn? How will they develop as leaders, and who will hold them accountable?
- Future Vision: What systems, processes, or procedures will be put in place to maintain the long-term success of the business and family? What communication guidelines will be agreed to by all family members to ensure all understand the objectives?
- Ownership Structure: What is the best structure for the estate planning of the senior generation? How will the next generation navigate the ownership responsibilities?
After building the business, transitioning the family business is the next most significant work. The complexities of decision making to sell, to hold, to transition could be fraught with strife. If done well, through proper planning and open honest communication, the transition has the potential to unite the family and create a collaborative relationship between the generations.