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…