What If There Is No Qualified Successor? + Separating After 111 Years

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The Business of Family
What If There Is No Qualified Successor? + Separating After 111 Years
By Mike Boyd • Issue #52 • View online
Although family enterprise owners may have a large amount of emotional capital invested in it and wish to see it continued by their children, it may be self-defeating to force a family management transition if the right circumstances do not exist.
Perhaps none of the children has the ability needed to run the business, or maybe rivalry between them is so extreme that none would accept one of the others as leader. If, after an honest assessment, the conclusion is that there is little chance of a successful management transition to the next generation, owners should begin to look for some alternatives.
Dividing the business - assuming the business can be structured to allow a demerger, the next generation can take over different parts, which then develop independently. But companies should not take this route purely for family reasons - it must also make good business sense (Don’t miss this week’s podcast with Srinath Rajam on this very topic).
Selling the company - when a transition within the family is not achievable, an owner may be better off selling the business rather than forcing the succession issue.
Appointing non-family managers - The central issue is one of trust - will the family’s principal store of wealth be safe in the hands of an outsider? However, family members in the business, aware of the problems they would have in filling the role, often prefer reporting to a respected professional manager.
Employing a bridge - If the obstacles to family succession are temporary (for example, if the successors have not yet acquired the experience to take over), a caretaker can be appointed to run the firm until the transition within the family takes place.
Inspired by the lessons in a great book, Family Enterprises The Essentials by Peter Leach.

Recommended Reading
Fortune's Children: The Fall of the House of Vanderbilt (Vanderbilt II, Arthur T)
Latest Podcasts
Srinath Rajam - Separating the Family Conglomerate After 111 Years
Chris Powers - How Big Of An Impact Do You Want To Have?
James (Jay) E. Hughes, Jr. - Family Wealth: Keeping It in the Family
Interesting Links
Houshi Ryokan: Longevity Becomes a Tradition - Tharawat Magazine
Council Post: Keep It In The Family: 6 C’s Of Managing Family Business Conflicts
What Role Should Your Children Play in Your Business Succession Plan?
Stay in touch
Mike Boyd is an Australian Entrepreneur, CEO and Investor, stewarding a group of private companies over the very long term. He hosts The Business of Family Podcast and is an active member of YPO. Hit reply, or say hi on Twitter.
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Mike Boyd

I'm inspired by multi-generational businesses and the families who steward them. Join me as I learn how some of the world's most interesting families share values, knowledge, resources, and wealth with the next generation.

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