Business Continuity is the Prize of Succession (Part II)


Legacies Newsletter
by Ernesto J. Poza

Succession is a Transition in Ownership and Management

Research conducted by Louis Barnes at Harvard indicates that when transition occurs only in management or ownership and not concurrently in both, tensions are amplified. I have experienced these tensions, for example, in successors who have assumed CEO responsibilities, but still do not own significant equity. I have also observed these tensions in families where a younger daughter, for instance, and not the oldest son becomes CEO. This “inverted hierarchy”, as Barnes calls it, means that in the transition, the management and owning family roles are reversed, posing adaptation challenges to the successor, the siblings and other family members. More…

When Family Shareholders Want Out

Too Many Aunts, Uncles, and In-Laws Who Own Stock and Have Clashing Interests and Personalities can Bring a Company to its Knees.
Here’s how to Buy Out Some of Your Family Shareholders to Preserve the Peace.

by Harvey D. Shapiro

Death, it sometimes seems, may be the easiest way out of a family business. With proper attention to insurance, succession, and estate planning, those who leave this veil of tears can also depart from their family firm with limited impact on the business. Other exits are often decidedly more traumatic for the businesses and the individuals involved.

Nonetheless, many family business owners have to realize there inevitably will come a time when some shareholders decide they want to do something else with their time and money. They may want to convert their investment into assets that are more liquid in order to meet other personal or business needs; they may want to diversify their assets to avoid relying too heavily on the company; or, they may find themselves tired of the business–or (perish the thought) their relatives. More…