Succession is a huge subject in the realm of family business. It is literally a subject about which complete books have been written. I just want to touch on one particular aspect of it here, because it is too often overlooked.
A lot of time and effort is usually required in order to make sure that a succession is well planned and executed. The process often takes years, as it should when you think about all that is at stake.
When you are looking at your family business and how you are going to hand it over to the next generation, getting it right so that the business will contine to be successful for generations to come is complex and fraught with all kinds of potential stumbling blocks.
Last year I wrote a blog about the difference between “family businesses” and “business families”. There are important distinctions here, and this is precisely where the complications come in.
My premise is that far too often, a great deal of effort is placed into making sure that the business succession is successful, and very little effort is made into making sure the family succession has been handled effectively.
Maybe it is because the business is easier to look at in quantitative terms. The business is still profitable, is still growing, and is still a leader even after the next generation has taken control. Wonderful and congratulations, it is not an easy accomplishment and likely took a great deal of planning and effort to make it so.
I only hope that everyone in your family sees it as the success that the professionals who helped make it happen do.
I believe that the succession of the business is wonderful, but only if it does not happen at the expense of a successful succession of the business family.
This week I listened to an interview with James E. Hughes Jr., who is seen as a guru in the field of family wealth preservation and whose books are now at the top of my reading list. He makes a distinction between the transfer of wealth and the gift of wealth.
The parallel that I am drawing is that the transfer is that of the business, whereas the gift is more about the whole family. Hughes has seen his share of situations where the transfer was emphasized and likely seen as a success by most, but the gift was not made in a fashion anywhere near its potential.
I am still very much a neophyte in the space of family business consulting, as I have only recently begun moving away from managing my own family office and into helping other business families with their transition and succession issues.
But when I hear veterans of the space, or read their books, or follow their courses, I am very much inspired that I have found my sweet spot. I have lived many of the situations that they speak about either through my own family or my wife’s, or through others who work with family businesses on a regular basis.
Too often people are guided by professionals who are well-meaning and knowledgeable, but whose solutions have negative consequences that just aren’t understood. It is relatively easy to find specialists to help you save taxes or set up a trust for your grandchildren.
What is harder to find is someone to help you work through all these proposed solutions and examine their consequences to your FAMILY first, and then only your business.
I believe that the success of your succession should be viewed first by your successors’ ability to succeed. Whether the business is even involved at all at that point should be a secondary consideration.