This study examined the effects of factors associated with generational transition on the longevity of family-owned businesses in the United States. The principal objective of the study was to develop a cohesive set of findings that will enable family-owned businesses to plan and implement succession strategies that will strengthen their probabilities of survival of the generational transition process.
The study found that, although the rate of generational transition in family-owned businesses in the United States continues to fall, there are signs that this trend may be reversible. The study also found that the most important factor in a successful generational transition is long-range succession planning. Such planning must deal not only with the selection and training of leaders from the new generation, but also must effectively address important financial and business continuity issues.
One factor that mitigates against successful generational transition even when long-range succession planning is conducted is poor leadership on the part of the present owners of family-owned businesses. While present owners may be good leaders in most respects, they frequently fail to recognize the unique problems associated with succession management.
An important new trend in generational transition in family-owned businesses is the selection of multiple successors who work as management teams in the post-transition lives of family-owned businesses. The team approach hold the potential of developing stronger management teams in the post-transition period for many family-owned businesses, an outcome that may reverse the downward trend of successful generational transitions among family-owned businesses in the United States.
Record numbers of family businesses soon will pass from one generation to the next or these businesses will fade out of existence. Over the next 20 years, an estimated $15 trillion in assets will be transfer...