by Craig E. Aronoff, Ph.D.
Co-Founder and Principle of the Family Business Consulting Group
“I’m a minority shareholder in a family business,”the phone call began.”I’m hoping to start a national association of people in situations like mine.”
“We could learn more about our rights,”she continued.”We could organize and try to pass laws more favorable to minority shareholders.We might even organize a market for trading our shares.”
The caller wanted my help.”Why do I think your association is designed for dissident minority shareholders?”I asked.”What has upset you enough to want to organize?”
She told me that her parents had left her shares in the family business.She wanted to work there, but women were systematically excluded from involvement.She sought to be on the board.Her brothers vetoed the idea.Whenever she asked for information about her investment, she was denied.Efforts to gain some value from her parent’s gift through dividends were rebuffed.Her attempts to sell her shares to the business or to her brothers got no response. More…
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-owned business.If you are interested in succession or the continuity of your business, you misunderstand that planning for that continuity is the critical factor.We believe the failure to adequately address the topic of succession is the primary reason that only 30% of family businesses 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 important role in the life of the family, as well as the life of the business.Yet owners and operators of family enterprises rarely address succession, apparently because of its powerful psychological implications, which can sometimes be overwhelming.
Admittedly Succession Is A Complicated Topic
Thinking about and dealing with succession can be extremely demanding, both emotionally and intellectually.When you begin to examine the concept of succession, you must deal with aging,mortality, control and power, just for starters.In addition, the business issues that founders must simultaneously deal with include ownership, management, strategic planning, and professional relationships from one generation with the next generation.These relationships include key non-family managers, clients, suppliers, lawyers, accountants and bankers. More…