Protecting Family Business Legacy

As per studies, only 30% of family businesses are successfully passed on to the 2nd generation. The percentage number falls further in the 3rd generation successions.

?

This means that from the family business owners wanting to pass their family business legacy to the next generation, only 30% are successful at the succession.

?

The primary reason for succession failure is lack of detailed succession planning and conflicts within the family for multiple reasons. The more the family involved in business, higher the chances of conflict and succession failure.

?

Succession / business transition is an eventuality and cannot be ignored. It is a mature family and family business leader that can envision the future and have a detailed conversation on the way forward regarding the succession plans.

?

Earlier planning allows time for a family business to identify successors, develop plans for adequate training and experience, introduce the potential successors to political and social contacts, allow the successor to gain the trust and respect of employees, vendors and customers etc.

?

Also, it allows the business owners to evaluate options, if the next generation / heirs are not interested in running the business, wishes to move abroad OR do another business.

?

Family business succession is once in a lifetime event and therefore to maintain the family wealth, socio-economic benefits and ensure the family legacy is maintained the business owner needs to ask the following questions:

?

1.?????? What legacy do I want to leave behind – successful v/s unsuccessful business succession

2.?????? Do I want my heirs to continue the same business – is it economically viable

3.?????? Are my heirs interested and capable to manage the business

4.?????? If multiple heirs, who will lead the business and what protocols to be followed

5.?????? How do I maintain the family assets and wealth across generations

?

At some point, family businesses have to deal with business succession - The succession can take place in a radical manner or in stable, gradual manner. The ultimate aim is to transfer the family status, wealth and legacy to future generations, successfully and harmoniously

FBTM is dedicated to assisting business families with their transition practises, we can assist to commence the succession planning in a professional and deliberate manner so that the challenges and pitfalls of a succession planning is avoided.