Identifying a Successor for Your Family-Owned Business
Published: December 5, 2011
Last week I was introduced to a family owned business owner by his estate attorney. They were interested in learning more about succession and exit planning. The business owner described his reluctance to begin planning for succession because he still had 20 years to go before retirement. Though dedicated to his large family, he loved his work and was extremely proud of the organization he had built and the team of 100 employees he had assembled over the last 3 decades. Yes, the last 30 years. The gentleman is over 70 years old. Yet, ironically he doesn’t see the immediate need to address the issue of “What is the future of the company should he not be there to continue to lead the day to day operations?”
Resistance by business owners to begin their planning for the inevitable transition is common. The reasons vary from “I’ve got plenty of time.” to “I love my work, I’m never leaving.” The truth of the matter is that many times we are not in control of the date we exit our businesses. Life events might dictate our decision. We might get an offer we can’t refuse or information from any of a myriad of sources that will change our previous thinking. Even if the business owner plans on staying at the job forever, someday they will not be reporting to work. Isn’t that a good reason to plan on the possibility you might want to realize the value of your life’s work for you and your family? It is an important issue and the effect of your decisions will be felt by many families; yours, your employees, your clients, and your vendors. Many times this business represents a disproportionately amount of the business owners net worth and the source of their largest income stream. Are there any guarantees that its value will be realized? The following article from Forbes discusses this very issue:
