Succession

Another important issue that is particularly difficult for family businesses is succession. As

mentioned earlier in this chapter, succession is about passing the business to the next

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generation. Decisions have to be made about who will take over the leadership and/or

ownership of the company when the current generation dies or retires. [40] Interestingly, “only a

third of all family businesses successfully make the transition to the second generation largely

because succeeding generations either aren’t interested in running the business or make drastic

changes when they take the helm.” [41] There are family businesses that manage the transition

across generations quite easily because the succession process chooses only the children willing

and able to join and work with the prevailing family, business values, and goals. Unfortunately,

there are also instances in which children have had to leave school as soon as legally allowed,

not equipped to manage either the business, their lives, or their family. These children spend

many resentful years in the business until it fails. [42]

Passing the family business to the next generation is a difficult thing to do, but succession is a

matter of some urgency because 40 percent of US businesses are facing the issue of succession

at any given point in time. [43]This urgency notwithstanding, there are several forces that act

against succession planning: [44]

1. Founder

o Fear of death

o Reluctance to let go of power and control

o Personal loss of identity

o Fear of losing work activity

o Feelings of jealousy and rivalry toward successor

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