Easing Family Succession: How a Tailored Recap May Be the Answer

by Richard A. Vinci
Family and closely controlled businesses account for more than two-thirds of all businesses in the United States. Many family and closely held business owners start out with the admirable goal to pass the business on to their family members and/or long-term valued employees. Despite the genuine desire to see the continuation of the business in the family, only 30% of family owned businesses survive into the second generation and only 11% survive into the third generation with only 3% of all family businesses continuing through the fourth generation or beyond. These grim statistics have much to do with poor succession planning which is exacerbated by the lack of viable liquidity options for retiring family members.1As the statistics indicate, in most cases succession just happens rather than being planned thereby resulting in less than desired outcomes. Over the next decade, family-controlled firms will experience an unprecedented number of succession events. Since ensuring the continuity and success of the family enterprise is a top priority for most family business owners, these owners will be compelled to address some daunting and potentially unpleasant issues including, but not limited to, succession, control, tax planning and capital procurement for growth. Further complicating matters is the tendency for emotions to run quite high around the family succession of the business which can lead to messy litigation. More…

Little Things Can Mean A Lot (Improving Operational Effectiveness)

Doud Hausner and Associates

We often speak of our “Five Transitions” view of succession planning for family businesses. These transitions involve:the Business, the Founder (or current leader), Management, Ownership, and your Estate Plan. Experience proves that effective planning and implementation of these five transitions are the keys to finding the “success” in succession planning.

The business transition has two basic components–operational effectiveness and strategic positioning. We are going to begin at the beginning and take a closer look at operational effectiveness. Whether or not it is your family’s vision to perpetuate family ownership into the next generation, your interests are best served if you take every opportunity to optimize operations effectiveness and profitability. Not sure where to start? Here are some simple keys to getting it done. More…