Only about 25 percent of family businesses survive 15 years or more. Only about 25 percent of those will survive the transition to the founders’ descendants. Many factors contribute to these statistics. Here are two critical factors.
1. Willing and able? Most parents want to treat their children equally when it comes to passing on the family wealth, but not all children are capable of running a business and not all children want to continue in the family business once the founding generation is gone.
2. Is the business viable? Take a sober look at your business and your descendants, and consider: Can my business be successful for another generation? Your business may have provided a brilliant solution to a need back when you founded it, but markets, technology and spending patterns have changed since then. Unless your business is nimble enough to make appropriate adjustments, it may not continue to be viable.
The continuation of your business and passing on wealth to your descendants may go hand in hand, but if none of your children are willing or able to carry on your dream, selling your business and passing on the proceeds may be the best bet.
Your trusted advisors can help you find a solution that works best for all concerned.