One Answer to a Family Business Owner’s
Wish to Treat His Children Equally
Family Business Quarterly
by Joseph F. Blum
How does a parent who owns a successful family business treat all his children “equally” when only some are working in the business?
In our age of career and family mobility, this question represents an increasingly common dilemma facing owners of family companies as they try to do estate planning. It raises a host of financial and emotional issues for both the older and younger generation. For example, how can children who aren’t working in the family business be granted equal portions of an estate that consists primarily of the business without alienating the children who are working in the business?
Absent resolution, these and other such questions can lead to feelings of resentment in both generations. Complete equality in such situations, as in much of life, is nearly impossible to achieve. But increasingly, those of us who work with family business estate matters are developing approaches that create feelings of equality so that everyone involved feels satisfied with the outcome. More…
Management Succession Issues
in Family Business (Part II)
by Bernard L. Erven, Professor and Extension Specialist
The Characterization of Effective Successions
The empirical data and anecdotal evidence are overwhelming on failure in the second and third generations of family business that were successful in the first generation.Buchholz and Crane report that 30% of family businesses in this country survive to the second generation and only half of these first generation survivors make it to the third generation.(Buchholz, p. 15)An obvious challenge to family business extension programs in human ecology and agricultural sciences is to alert family businesses to the keys for continued operation.
Handler (1994) reviewed the literature on effective successions.She wanted to answer the question, What characterizes them?Not surprisingly, she reported characteristics of effective successions from a diverse set of research reports rather than a conclusive set of guidelines for success.Following are five actions for management succession success consolidated from her list of more than 15 factors extracted from the research literature on management succession: More…