Louisiana business owners need a succession plan for their family-owned company that aligns with their business and family values. The best strategy may require some negotiating between the desire to balance company-based values with the love-based values of family.
Some conflicts may become unavoidable as family members have different personal and business agendas. Still, thoughtful and constructive conversations regarding values can reduce friction and increase the chances of a successful business transition.
Business-related succession goals
Whether family members will take it over someday, any business needs to consider quantitative business goals in its succession plans. These goals can include the current business valuation and plans to maximize it, mitigating taxes, the future ownership structure and identifying the best candidates for the management team that takes over after succession.
Clarifying these goals may involve making decisions that feel unfair to some family members, especially if some work in the business while others do not. Many business owners want to share their business success equally with all their children, which can trigger some emotion when children contribute to the company unequally. Bringing the conversation back to family values may provide workable solutions.
Family-based succession goals
A family-owned business has accumulated value that will go to the owner’s children through continued employment or proceeds from selling the company. The owner must gain clarity and have family discussions that prepare their offspring for success in transitioning the business and the passing on of wealth, such as:
- Clarifying core values that drive their family and business decisions
- Principles guiding their ideas about inheritance and benefits of leaving significant wealth to their children
- The possibility that leaving significant wealth to their children could be detrimental
Discussions where every family member feels heard, even with dissenting opinions, can also ensure a smoother transition plan.
Forming a workable plan
Some statistics show that only one-third of family businesses survive more than one generation, and three-quarters of family-owned companies have no succession plan. Aside from quantifying the company’scompany’s financial value and other business information and complying with applicable business law, owners may have more successful company transitions by making family values an integral part of their succession plans.
Family-owned businesses often work based on family values. Understanding these values can help identify whether a successor, family or not, fits into the existing culture.
Having a thoughtful business succession plan that integrates family values can ease the transition of a family-owned business and ensure it thrives well into the future.