Expert Insights: How do I talk to my family about handing over our family business to the next generation? Why do I need a written transition plan? Things are fine.

May 30, 2018

Question:

How do I talk to my family about handing over our family business to the next generation?

Answer:

Transitioning out of your family business is one of the most difficult and impactful decisions a family business leader will make. Effecting a successful transition takes careful planning and consideration of what the business will need in terms of core competencies and attributes within next generation leaders in order for the business and the new leaders to succeed. Beginning conversations long before you plan to actually transition the business is wise as it affords you, the business and its key stakeholders, as well as next generation leaders ample time to prepare. Communicating your timeline and assessing where the business stands today, opportunities and challenges moving forward, and competencies needed in next generation leaders are critical.

Question:

Why do I need a written transition plan? Things are fine.

Answer:

You’ve put a lot of time and energy into building your business and you likely have a strong vision of its’ future. Avoid risking financial success—and jeopardizing family harmony—by planning ahead, having open, honest conversations with family members and employees, and aligning your planned transition with your company’s strategic goals and organizational needs. A thoughtful, detailed and objective strategic plan that reflects your family’s values and supports its goals helps address potential issues before they arise. No two family business transitions are the same, so following a framework adapted to the needs of your family and your business is best. It can take many lifetimes to build a family business but just a short time to destroy value it if you don’t have a well-articulated transition plan.