Private business owners frequently have a strong desire to see their business legacy carried on by their families. Often this desire to pass the business to another generation brings out conflicts, stress and dissension among family members.
Frequently, conflict results from confusion among family members as to the rights, responsibilities and limitations of their particular roles within the family business structure. Without a clear understanding of one’s proper role within a business misunderstanding can easily occur. One solution is to formalize corporate governance.
A Case Study
One client of the Podolny Group wished to pass on his business to his three children. Each of these children had a different involvement with the business. One was the chief operating officer and the heir apparent to the father as CEO. One was involved as a bookkeeper in the accounting department. The third was not active in the business. There was considerable stress and conflict between the first two to the extent that the father was considering selling the business to a third party rather than pass it on to them. The child in the accounting department felt she was being excluded from the company’s decision making process. The crux of the conflict revolved around a feeling by the second child that the first child was treating her as an inferior.
Next week, I’ll share how we helped to resolve these issues. In the interim, what are some ways you have worked to resolve family succession issues?