Succession in a High Profile Family Business

This Year’s Super Bowl has some family business ties. In an NFL league where the majority of teams are family held, it’s surprising that only one of the final two teams, the Denver Broncos, is family owned.
The future of family owned sports franchises are facing increasing new challenges in ownership and leadership transitions.
  1. The ever-increasing value of the franchises is making the resulting increase in estate taxes more difficult to finance for the next generation.
  2. Sports teams and other family firms with high visibility owners face a more difficult path to succession. These firms have all the issues of a family business with the added challenge of everything they do being under the scrutiny of the media microscope.

Some Challenges of Succession in a High Profile Business

  • The younger generation has to shadow their well-known parent and prepare for leadership out in full view of the public. Often these high-visibility owners want to keep succession planning private and away from the media. This can actually hinder the success of a succession plan, by not allowing the younger generation to gain recognition.
  • The younger generation has to be visible and assume some significant responsibilities to show they are competent to take over.
  • Often the owner has a very charismatic personality and attracts customers and employees through personal relationships. The younger generation has to learn these traits and develop these relationships while not overshadowing the owner.
  • High-profile leaders are more reluctant to prepare the next generation for succession.  They often want to stay on longer, because of the ego factor. They aren’t in it for the work or the money, but rather the recognition.
  • It doesn’t have to be as high-profile a business as a sports franchise, it could also be a founder of a family firm who has been personally responsible for bringing in long-standing customers and long-term employees.
  • When it comes time for the younger generation to take over, they have to decide whether to carry forward with the same style as the founder or begin to make their own imprint on the business. It is even more difficult to implement change in a high-profile business.

Takeaways:

  1. It’s okay to keep succession planning private, but have a plan in place to keep the younger generation visible and relevant. If they suddenly appear after the founder has stepped down, they will have difficulty gaining respect.
  2. It’s important that the younger generation have a high visibility role in the firm. Often sole responsibility of a division or special project can accomplish this.
  3. Shadowing the founder can be difficult in a high visibility business.  It can be awkward for the younger generation following the owner around, and may even make them seem less capable, because of the contrast in styles and responsibility. Think of former President Bill Clinton and President Obama.