Consider the emotions involved in exit-planning decisions
The failure of many family businesses to transition successfully to the next generation is legendary. What is often unappreciated, however, is that barriers to exit and effective exit planning frequently have emotional underpinning. Failure to discern and address these factors may result in significant reduction in value.
Emotional factors may override sensible decision making in many areas, including overvaluation of the business, the decision to sell at a time of low value, and the wrong successor being chosen for the wrong reason.
Business owners would be wise to think about their succession plans early and often, which means realistically considering the value of their business and the possibility of a sale. If selling the family business is not an option, the senior generation must properly address estate planning, because to do nothing can ruin the company.