Meeting the Challenges of Succession in the Family Firm

Meeting the Challenges of Succession
in the Family Firm

by Thomas Davidow and Richard Narva

Succession from one generation to another does not happen by accident in a family-ownedbusiness.If you are interested in succession or the continuity of your business, you mustunderstand that planning for that continuity is the critical factor.We believe the failure toadequately address the topic of succession is the primary reason that only 30% of familybusinesses continue into the second generation and that only 10% more continue into the third.

Succession exists as an underlying issue in all family firms, playing a tremendously importantrole in the life of the family, as well as the life of the business.Yet owners and operators offamily enterprises rarely address succession, apparently because of its powerful psychologicalimplications, which can sometimes be overwhelming. More…

Financing the Family Business: When Growth and Succession are at Issue

Financing the Family Business: Northeastern University
When Growth and Succession are at Issue

Family Business Quarterly
by Thomas M. O’Reilly

The following is a true story. The names and certain details, however, have been changed to ensure confidentiality.

In 1957, Stanley decided to go into business. With $10,000 of his own and another $10,000 from his brother Fred, he started a small parts supply company.

By 1994, Stanley’s company had become a thriving $33 million business with 15% annual growth. Fred, who still owned 50%, was not seriously active within it. He used the company as a place to launch various less-than-successful enterprises. He relied on the 50% split of company profits that Stanley had always given him to live on and to fuel his various undertakings. More…