TITLE : KEEPING IT IN THE FAMILY: SUCCESSFUL SUCCESSION OF THE FAMILY BUSINESS.

Preface

"Solving problems is the work of a good mind. Identifying problems is the work of a higher intellect.

Anticipating problems is the work of all the mental faculties, enhanced by an appreciation of the propensity of human beings for shooting themselves in the foot."

This book has been written with the hope of putting down on paper a few answers to some of the questions that I'm asked about handing over family businesses to the next generation of owners and managers. Business owners stop me in the hall following one of my seminars and tell me things like this: "I've worked for 30 years to build my company, expecting that my children would someday take it over and make careers out of it. Now! I'm ready to retire and it seems like they aren't interested. What am I gonna do?"

Business owners' family members ask hallway questions, too: "I really would like to go into my parents' business. But I can't get them to sit down and make some kind of a plan. I've got better things to do with my life than waiting around to see who inherits the company. Is there any way this can be resolved?"

Behind the frustration of such questions are the human factors that influence-in some cases control-the success or failure of family business succession. As in all transfers of business ownership, accounting issues like the valuation of assets, compensation and incentives, and retirement plans play a role in succession. But when an ownership transfer is carried out within a family, accounting issues are often overridden by interpersonal issues, and even the simplest handover of the smallest business becomes a complex, emotionally loaded proposition.

Senior business owners may want their kids to take over their companies, but at the same time they just can't face giving the companies up. Sons and daughters of owners may want to come into their families' businesses, but they don't understand how the businesses work or how to run them successfully. The relationships and traditions that bind a family together can tear it apart when it comes time to pass along the family businessor they can be the basis of a dynamic, durable and profitable family heritage of business ownership and management. The outcomes of succession are often determined by how well the family deals with its own special mix of personalities, priorities and choices.

This book begins with a look at families in business, how they got in business and the chances of their continuing in business for more than one generation. It describes the analytical thinking that senior owners and prospective successors should do about the current characteristics and future needs of both the business and the family, factors at the very heart of successful succession.

Mechanisms for generating and confirming family members' interest in and readiness for succession are discussed in terms of marketing principles. The book describes how to organize a businesslike succession plan and how to make the tough decisions that are inevitable during the ownership and management transition. Finally, it offers some answers to the questions of why, how and when a senior business owner should let go of control and finally pass responsibility and authority to the next generation.

A self-assessment, planning organizer or checklist appears at the end of each chapter to help systematize the planning and management of succession. The Appendix cites additional sources and resources that may also be of help but whose effective application to any specific succession situation can't be guaranteed.

Throughout, this book emphasizes the human factors in family business succession, the stresses they can create and the ways they can be handled. Such fine family virtues as love, respect and shared values can sometimes make business dealings among family members pretty thorny. But those same virtues can also make working together to sustain the family-owned business a rich and rewarding enterprise.

When my grandmother reached her one hundredth birthday, she observed to the assembled family that if she'd known she was going to live so long she'd have taken better care of herself. This book is about how to make sure a solid, satisfying family business lives a long time and how to take care of it-and the family that owns it-in the process.

James W. Lea, Ph.D.