8 Reasons Why the Kids Don’t Want the Family Business

It’s no secret that family businesses face a specific challenge: Only one in three is ever expected to successfully transition to the next generation. Why? There is a litany of reasons why many children don’t want to—or even shouldn’t—inherit the family business. Let’s take a look.

1. It’s no gift. Often, when the business owner is nearing retirement age, they aren’t looking to simply gift the business to the next generation—they’re looking to sell it. For those lacking the funds to buy out the elder, inheriting the business means buying it for less than it’s worth, being buried in debt, or rendering the sale itself wholly impossible.

2. Inexperience. Blood ties do not dictate business acumen, and many inheritors are not prepared to be business owners. Add in long-held relationships with board members, staff, and others that aren’t transferable, and you have a recipe for disaster.

3. Maximized profit. If the goal is to set up the original business owner for retirement, they will often get a better deal through M&A than through passing the business to a family member. Shopping the business to competitive offers will yield a higher profit than selling to a family member.

4. Complicated succession. It can be difficult enough to deal with one heir, let alone multiple. For family business owners who divide their shareholders among numerous family members in the name of being “fair,” leadership can often become fractured, and the business value drops.

5. Uneven leadership. For businesses that are already owned by more than one person, succession becomes even murkier. Shareholders will be forced to either choose multiple heirs who may or may not work well together or decide whose heir gets priority.

6. Greener pastures. For many adult children today, education creates further possibilities outside of the family business. Nearly a quarter of those in the U.S. over the age of 25 have a bachelor’s degree and, with that, have options for careers that go beyond the family business.

7. Perfection pressure. It’s not unusual for a family business to be poorly run. Those next in line are therefore pressured to improve and optimize what has been given to them—with mixed results.

8. Unawareness. By contrast, many business owners simply revert to a family business model as they are unaware of the possibilities and benefits that an M&A business deal can offer.

You don’t need to give away your business to an unwilling family member or create drama among shareholders for the next in succession. Explore the possibilities in M&A with Symmetrical M&A Advisory.

Please contact us for a confidential discussion of your specific situation. We have experience helping business owners across various industries sell their businesses, as well as relationships with buyers interested in new opportunities.

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