Only about 25% of family businesses survive 15 years or more, and only about 25% of the “survivors” will survive the transition to the founders’ descendants. Many factors contribute to these unencouraging statistics. Here are two critical factors.
Most parents want to treat their children equally when it comes to passing on the family wealth, but not all children are capable of running a business. A corollary is that not all children want to continue in the family business once the founding generation is gone, irrespective of the children’s capabilities.
Thus, you should take a sober look at your business and your descendants, and consider: Can my business be successful for another generation? Your business may have provided a brilliant solution to an acknowledged need back when you founded it, but markets, technology, and spending patterns have changed since then. Unless your business is nimble enough to make appropriate adjustments, it may not continue to be viable.
Moreover, what is more important: the continuation of your business or passing on wealth to your descendants? The two may go hand in hand, but if none of your children can or wants to carry on your dream, selling your business and passing on the proceeds may be your best bet.
Your trusted advisors can help you sort through these questions (and many more) and help you find the solution that works best for all concerned.