Passing the Family Business to the Next Generation

Passing a small, family business to the next generation can be difficult, but without any planning it will be exponentially more difficult.  Consider the following example taken from Ian Mount, How to Prepare Your Business for Succession, NY Times, March 17, 2010:

Mr. Frechter’s father, George, had worked until the day before his death, at 86, and like many small-business owners, he had made no plans for what followed.

Purchase orders were still handwritten. There was no list of best customers or products. There was no data and no way to analyze the company’s performance. 

Problems can be avoided with some basic planning, which may include picking the most qualified successor to run the business, preparing the successor for the job by requiring them to gain working experience, and protecting important non-family employees that should remain with the business.

For more information, see Ian Mount, How to Prepare Your Business for Succession, NY Times, March 17, 2010.

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this to my attention.