Prepare your business for a family transfer

Many owners and entrepreneurs wish to sell or gift their company to a family member when it’s time for a transition.  That can leave a substantial legacy and a continuation of the family’s values and accomplishments.   Nevertheless, less than one-third of all family-owned business are passed on to the second generation and less than 10% of family-owned businesses are transferred to a third generation.

These surprising results are caused by the intersection of two powerful dynamics:  the owner exiting from a business that he or she built, combined with often complex intra-family relationships.  In short, successful family business transfers can be difficult and require careful planning and execution to be successful according to these criteria:

  • The owner must gain financial independence and security apart from the business.
  • The next generation of owner(s) must gain ownership and operational control of the business.
  • The business must continue to prosper after the founder leaves.
  • Participating family members must feel like it’s a reasonable distribution of wealth and control.
  • Key employees and managers must believe it’s a rational solution for them and the business.
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