I am a fourth-generation leader of a private family business who is beginning
to accept that I will be the last in the family line to hold this role. Neither
my adult son nor daughter is interested in taking over, though I believe both
are up to the job. I am in my late 60s and would like to retire. Obviously I can
sell the business, but I don’t want to lose my connection entirely or see it go
in a direction I’d be unhappy with. What ideas do you have for keeping a hand
in?
The answer really depends on how large your business is and how much room you
have to maneuver financially. If your business has sufficient resources, the
best bet is to put a board of directors in place that will be responsible for
securing leadership when you are no longer willing or able to provide it. With
your children on the board, they can maintain active oversight and, who knows,
it may even lead them to develop a greater commitment to business leadership.
If your business is small and somewhat cash-strapped, you may need to hire a
bridge manager: someone who can manage the company for you when you are no
longer there in hopes that, in a later generation, family may want to become
involved.
If you do not think your children or their children will ever enjoy
being owners, then hiring a manager and contracting with him to buy the
business, or actually compensating him in stock, may prove one viable route
short of an outright sale. In any case, as you are in your 60s and your children
are probably in their 20s or 30s, it is still early; I’d be more concerned if
they had hit their early 40s. So you do have some time to get things in
order.
Joseph H. Astrachan, Cox Family Enterprise Center,
Kennesaw State
University, Kennesaw, Ga.
How dependent are you, financially, on income from the business? How much
cash flow does it generate? If you are not at the helm, someone must be. Hiring
someone as capable and experienced as you will be costly. If you need more
income than the business can provide with an outsider at the helm, then your
only option is to sell the business. Your successor, whether a manager or a new
owner, may not be too keen on having you meddling in the business.
How much
expertise and experience is required to run your unique business? How long will
it take to find and train a good person? You’re already in your late 60s, late
for effecting succession. Recruiting good nonfamily managers is a leading
problem among family businesses. You don’t mention any key, capable people being
on board already; if that were the case, looking inside might be an
option.
Pat Frishkoff, Leadership in Family Enterprise, Eugene, Ore.
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