In this issue
I get upset when I hear a young potential successor, impatient to take over the family business, say, “Give me a shot at it.” To me, these words reveal a lack of risk-understanding. They also suggest entitlement, a belief that a successor has the right to gamble with the family patrimony
Does your family have a plan for management succession? Forequity distribution? Have you communicated to your children your plans, expectations, personal values,and hopes for the future? Have you asked them what their life goals are and how the family businessfits into their plans? If you haven’t been talking about these important matters, you might start byholding a family retreat.
Most research on family businesses is less than 10 years old. There are few quantitative studies on how many family firms exist in the United States or their impact onthe U.S. economy. The lack of substantial data is not surprising, given that until recently familiesin business were not regarded as a distinct business entity with unique concerns and issues. Becausemost of these businesses are privately owned, accurate information about them is not readilyavailable.
A brother and two sisters receive equal amounts of non-voting stock in their father’scorrugated box company after a 1980 preferred stock recapitalization. The siblings are constantlyarguing at board meetings and family reunions. The brother runs the company. The sisters are passiveshareholders who claim he refuses either to pay dividends or to repurchase their stock. They arelocked into an illiquid investment and have found no way out.