Three of the most significant are succession, communication and management. Post-World War II entrepreneurs created the world's greatest wealth and by the year 2010, they will be retiring and passing the baton of leadership in unprecedented numbers. Though inevitable, succession is often the least planned and, consequently, the most perilous event for a family business. History has shown that only one in three firms will survive the transition to the second generation. Only 10 percent of the original group will survive into the third generation of ownership.
Succession is a highly emotional issue for senior generation owners.
Some are reluctant to face their own mortality. Others grapple with how to split ownership equitably and choose a successor without creating family chaos. And some aren't confident the next generation even has the right stuff to do the job. The financial consequences of such procrastination can be devastating. Ideally, a family business should begin the process of succession planning a decade or more before the event.