Business Transitions – Family Succession

The decision to transition the business within the family can be the best or the worst experience in the lives of all involved. Those that plan the transition with a long lead-time, attention to training of the next generation in technical and management skills, close attention to family dynamics and conflict resolution, clear communications and the use of skilled professional advisors have a good chance of making a family succession plan work.

Unfortunately, most family business owners leave the process until it is too late, base decisions on emotions, do not communicate, and let family conflicts influence decisions. These cases do not end in harmony and family cohesion.
What family members do not understand is that for a transition within a family to be successful, the owners (typically Mom and Dad) have to make decisions in their own best interests as well as in the interest of leaving the business in a strong position moving forward.
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What is a business transition?

In this first installment of 5 blog entries on business transitions we will look at the different types of transitions and the implications of each. This blog series will deal primarily with business to business transitions from the seller and the buyers’ perspective. Family succession and management buy-outs will be covered in a future blog in general terms in order to provide an overview of the scope of the issues that need to be dealt with beyond the financial transaction.

In the simplest terms, a business transition is an event or transaction that results in a change in the effective ownership of a business. How can the owner of a business put their company in the best position to influence the subsequent terms of the change of ownership?

Business transition transactions can be complex. It is important to have a thorough understanding of the key elements in a successful transition.
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