Values, Morals, and Matters of the Heart
A seminal event occurred in 2006 that will have a profound impact on family businesses in the years to come. The first baby-boomer turned age 60 and here is why it's such a big deal. Many of these baby-boomers own successful businesses and they're seriously thinking about (if they haven't done it already) reducing their work schedule so they can spend more time doing the things they love. For those with a son or daughter who is working in the family business, it's natural to want to pass the business on to them.
Sometimes, this works out great for everyone. But all too often the second generation simply doesn't have the mindset to continue the business effectively. In "Beating the Midas Curse," estate attorneys Rod Zeeb and Perry Cochell reference studies that show 65 percent of second-generation family businesses fail and a mind-boggling 90 percent of third-generation businesses fail.
Now, when you consider that many of these businesses had extensive traditional succession plans drawn up by brilliant attorneys, something is dreadfully wrong. Notice that they used traditional succession plans. Traditional succession plans deal with legal strategies and tactics to avoid taxes and transfer control to the next generation. But they don't address values, morals, and matters of the heart.
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