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Successful Family Succession

Successful Family Succession 

The numbers aren’t pretty: roughly 70% of family businesses won’t survive into the second generation and 90% won’t make it to the third, according to the Family Firm Institute. We asked Perry Muhlbier, a family enterprise adviser with KPMG Enterprise, how to do it right.

When to start

The best advice is to start early. Generally, you should start the process when next-generation family members begin working full-time in the business in management roles. Ideally, the family business owner will remain active in the business for a period to watch over how the next generation is managing the business and observe their behaviour.

 

How to start

Engaging the services of a family enterprise adviser is a good first step. The adviser can ensure that the plan addresses family issues that pertain to the future management, leadership and ownership of the business. The adviser can also ensure that the current owners and the next generation know about and agree on the details. By documenting the family’s decisions and the reasons behind them, the adviser can provide the family with the roadmap for achieving the business’s transfer. 

 

Who should take the lead?

Better results can be achieved by having the next generation of potential successors lead in the overall succession process, with the help of their family enterprise adviser. This way, the next generation can consult with and win the approval of the current owners in formulating the management and ownership succession strategies. Following this approach assures both sides that the plan addresses their needs and gives them the confidence to carry it out.

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