Succession planning in the family business can facilitate the continuity of the business. With this measure, the relationship between heirs can be better managed and the best solutions can be found for the company’s future.
An article by Karime Costalunga recently published on the website Consultor Jurídico reinforces the importance of succession planning.
“A few days ago, a dispute came to light between the heirs of a large family business, as often happens, regarding the course being given to the family’s business by the one who was consecrated as the administrator of the business upon the death of his father, the member of the previous generation who set the direction to be navigated.
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Succession planning, learn the benefits
This is one more demonstration of behaviors. And, often, these conflicts are the result of the lack of dialogue and preparation of heirs for the continuity of the business. It may also be the result of the prevailing culture in a given generation, in which it is expected that the following generations will automatically continue the business, but, little by little, one perceives the impossibility of this happening.
It is well known that, increasingly, families grow, but the patrimony and the generation of income do not necessarily accompany the growth and the consequent demand from the members of the family.
One of the solutions to prevent this growth from being a problem lies in planning, dialogue, and transparency.
Succession planning in the family business
If the members of the family, from an early age, manage to find their place within the organism — or even outside of it — it becomes easier to provide for the healthy development of the company to the point that it is perpetuated for future generations. If the members of the family manage to talk about their desires and aspirations, even undertaking personal coaching, they manage to become more fulfilled and productive adults, whether inside or outside the company.
Consequently, they are all prepared for a freer and more authentic future, including establishing bonds, albeit in a conscious manner and without failing to pay attention to the business, even if they do not perform labor activity in it.
Some international surveys indicate that around 65% of the world’s companies have their control in the hands of families. A survey by Sebrae at the end of the last decade indicated that in Brazil this concentration reaches close to 90%. A 2010 global study by PwC showed that only 36% of companies whose control is in the hands of families reach the second generation and only 19% reach the third. This low survival rate has as its main cause the lack of corporate governance and of adequate legal succession planning (of its ownership, control, and management).”
Read the full article here.
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