Christy Maxfield, MBA, CEPA’s Post

Why should I own a business or joint assets with my family members? This question is one of the hardest questions founders and family members have to answer time and time again in the journey of transitioning their family business to the next generation and its very interesting that the answer is never clear to them in the beginning or sometimes till the very end. The answer to this question is however one of the core pillars of your wealth transition journey. Some founders feel its a responsibility, others feel they have no choice and would seem selfish or callous not to share their success while some see it as a legacy, family uniting and bond fostering vehicle and for others its a mixed bag of all the above and more. For the next generations, some feel it is their right or for some their burden to shoulder. As the family ,family business and portfolio grows, as the assets multiple in value, diversity of asset classes , locations and complexity , the intricacies around assuming leadership roles and managing the family portfolio increases. This responsibility makes some members feel like they are stuck in a trap while some love the way the shared goals fosters love and unity. Engaging clients through the years shows that the immense pressure the family leadership feels to continue to keep the family together in love, peace and unity is very real and quite demanding. There is no one size fits all answer to this question, but it is a question that founders and inheritors need to answer to make the right decisions about the family business and assets in every generation. Again I ask, why should you own a business or joint assets with your family members? #familybusiness #familyoffice #privateenterprises #sharedwealth #jointassetmanagement #estateplanning

𝐎𝐧𝐜𝐞 𝐮𝐩𝐨𝐧 𝐚 𝐭𝐢𝐦𝐞, 𝐚 𝐟𝐚𝐦𝐢𝐥𝐲 𝐛𝐮𝐬𝐢𝐧𝐞𝐬𝐬 𝐟𝐚𝐢𝐥𝐞𝐝 𝐭𝐨 𝐤𝐞𝐞𝐩 𝐮𝐩 𝐰𝐢𝐭𝐡 𝐭𝐡𝐞 𝐦𝐚𝐫𝐤𝐞𝐭. Its tried-and-true ways lost their luster. Comfort created from generations past, becoming the breading ground for mediocrity, and failure to adapt, becoming the linchpin for stagnation. Resulting in a shift from innovation to preservation.   As the story goes, that which does not grow eventually dies. There are many reasons why most family businesses fail to survive beyond the first generation. Before we dive into the specifics. Let’s look at the statistics. 𝐒𝐮𝐫𝐯𝐢𝐯𝐚𝐥 𝐑𝐚𝐭𝐞𝐬: ◾Only about 30% of family businesses transition successfully from the first to the second generation,  ◾with a further decline to 12% for the transition to the third generation,  ◾around 3-5% survive into the fourth generation or beyond Now, contrast that with family-run businesses' contribution to the US economy. 𝐂𝐨𝐧𝐭𝐫𝐢𝐛𝐮𝐭𝐢𝐨𝐧 𝐭𝐨 𝐔𝐒 𝐞𝐜𝐨𝐧𝐨𝐦𝐲: ◾Employ 62% of the workforce ◾Contribute 64% of GDP ◾Total of 24.2 million Family businesses in the United States To say Family-run companies are vital is an understatement. Yet why do so many fail? More importantly, how can we improve the success of passing the baton? 𝐂𝐨𝐦𝐦𝐨𝐧 𝐑𝐞𝐚𝐬𝐨𝐧𝐬 𝐟𝐨𝐫 𝐅𝐚𝐢𝐥𝐮𝐫𝐞: 1. Lack of Proper Succession Planning: Many family businesses do not have a formalized succession plan,       a. Leading to uncertainty.      b. Conflict when transitioning leadership from generation to generation.       c. Poor leadership decisions,      d. lack of direction.      e. Current generation holding on to power too long, preventing change and innovation, as they seek to protect what is, instead of what could be.  2. Family Conflict and Lack of Communication:       a. Disagreements among family members       b. Misalignment of management styles      c. Unclear goals or lack thereof due to competing interest      d. stifled growth and operational effectiveness,       e. leading to stagnation or failure. 3. Mixing Business and Personal Matters:        a. Family roles and business roles blur.       b. Leading to more conflicts and inefficiencies.      c. Personal dynamics interfere with business decisions.      d. Subjective rather than objective decision-making.      e. Deteriorating trust from non-family members working within the business Stay tuned where tomorrow we'll discuss strategies to overcome the above, Soon, I’ll be hosting a live mastermind to discuss specific strategies family businesses can implement immediately to build their legacy and accelerate their profits without spending more money on advertising, marketing, or closing more sales. Until then, comment below on how your business navigates the many challenges you face each day. #FamilyBusiness #BusinessStrategy #BusinessGrowth #BusinessTransition --- Find this helpful? Reshare ♻️with your network. Want to be notified of future posts? Follow and click the bell 🔔.

The kids aren’t interested … Medium to large sized family business (turnover $50M+) have a problem: the next generation aren’t interested in joining. There are so many options out there in the job market (jobs that didn’t exist in the previous generation) that the family business often doesn’t hold an interest. Grant Thornton’s July 2017 report ‘Diversity of Thought in Family Businesses’ discusses the risk-averse nature of mature family businesses that can often be an impediment to the next generation wanting to make changes. Many family businesses suffer from two big issues: (a) younger generation being frustrated and the older ones feeling disrespected, and (b) a reluctance of the founders to step aside (the so-called ‘sticky baton’). It could be useful to think of this in ‘purpose’ terms, as per the previous article. If the foundation for intergenerational family connection is a purpose that transcends the family business or wealth-generating capacity, then discussions about what the next generation do with their lives are built on a stronger foundation. Consider This: If the next generation don’t want to join the family business, then either the business might need to change, or the next generation might need to change. Which of those is more likely to happen? https://lnkd.in/guw6SYNv For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. #familyoffice #wealthmanagement #conflictresolution #strategicmanagement 
#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment
#entrepreneurship

The Greatest Destroyer Of Family Wealth I really liked this perspective. The premise that you shouldn’t pass a business down through generations but sell it to the highest bidder at an opportune time makes a lot of sense. But what happens when you suddenly have a lot of cash. I’ve seen this be a burden too where the family then relies solely on outsiders to preserve wealth. I think that each generation needs to have some sort of entrepreneurial endeavour to continue to grow the capital base. F Partners Read The Full Article Here: https://lnkd.in/eS_H559p #singlefamilyoffice #familyoffices #familyoffice #privateinvestors #privatemarkets

For family-owned businesses, the dream is often for the next generation to take up the reins and continue the legacy. After all, your business likely represents a significant part of your family wealth, but it’s likely the most significant gain may come when the business is sold. So, it makes sense, for both practical and emotional reasons, to ensure the longevity of the business and the transferability of its inherent value the best way you know how. And that may mean considering a nonfamily member to lead your company into the future, hopefully strengthening it along the way, until you and your family are ready (or need) to sell it. https://lnkd.in/gsSUJ8s2 #successionplanning #wealthtransfer #generationalwealth #business

Now here is a family business conundrum. And I bet this is very common for the clients of many Accountants, Lawyers and Bankers. Today, I met with the owner, patriarch and driving force behind a leading Australian owned brand. A business worth 100's of millions of dollars. And the sucess of the business stems from his vision, creativity and most important leadership. Many years ago, when the owner and his wife separated, the terms of the divorce meant she kept a 40% shareholding in the business. At the time, their children were still young. So when they re-did their Estate Plan & Will's it was structured so that in the event of 'Dads' death the business would be sold, with the proceeds placed in various trusts for the children, family & philanthropy. In the event of 'Mums' death, the shares would he split 50/50 to the kids. Fast forward, everyone is grown up & the children, who both hold senior roles in the business are both partnered (but not married nor family). So we scenario tested the Estate Plan. A road block, in the event the shares in the business transfer from mum to the kids, and the kids pass. Dad, who 'is' the business and the driving force of its sucess will have two new shareholders with quite a valuable stake to deal with. Is this where they want the shares to end up? Does he want to be dealing with these new shareholders? And how would he access the capital to pay them out? Nothing like a robust discussion to flesh out future planning needs. #businessadvisory #successionplanning

~Start Now: 4 Tips on How to Build Generational Wealth~ Some of the Fortune 500 companies started out as a family-owned and operated business that has been passed down through the generations over the years. https://bit.ly/41xgeoJ

I'm thrilled to share a thought-provoking article by my esteemed partner at Wingspan Legacy Partners, Maryann Bell. In "Blood, Sweat, and Tiers: Achieving Equitable Ownership," Maryann dives into the critical topic of sweat equity and its pivotal role in family-owned enterprises. 📝 Key Insights & Why It Matters: Sweat Equity vs. Blood Equity: Rewarding family members who actively contribute to the business, rather than solely relying on inherited ownership, fosters a culture of meritocracy and ensures fair compensation for effort. Equity for Contribution: Implementing a more equitable ownership structure that reflects earned authority and contribution enhances relationships among family members and aligns incentives for business success. Designing Fair Programs: Practical steps for creating sweat equity programs, with the help of independent advisors, can navigate complex family dynamics and reduce leadership uncertainty, ensuring the business's longevity. 💡 Takeaway: Both sweat equity and blood equity are vital to family enterprises. While blood equity grounds the business in family tradition, sweat equity drives performance and sustainability. I highly recommend giving this article a read if you're involved in or advising family businesses. It provides invaluable insights into structuring ownership to reward true contributions and ensure the long-term success of family enterprises. #FamilyBusiness #FamilyEnterprise #Equity #SuccessionPlanning #SweatEquity #Ownership https://lnkd.in/e--U-uUs

An interesting article Kyle shared from Inc. Magazine caught my attention. It's surprising to learn that 70% of businesses that hit the market never find a buyer. That's a significantly higher figure than I would have anticipated. Over the past year, we've observed an uptick in lenders' willingness to finance acquisitions. Given that financing is often a crucial component of the capital stack for buyers, I'm curious to see if the expanded financing options will reduce that percentage over time. Only time will tell!

HAVEN'T SPOKEN ABOUT THIS FOR WHILE....When we are thinking about succession in the family business, there is a strong case to consider Employee Ownership as a succession model. In the UK over 300 businesses are now wholly or substantially employee owned. As sure as eggs is eggs all family businesses have to face the challenge involved in transferring ownership from the founders, or current generation. The process is ALWAYS a DAUNTING one, the issues are usually the same for everyone; preserving the legacy and ethos of the business, maximising effective proceeds for the existing generation, minimising tax leakage during the transfer and making sure the new structure is not overburdened by debt. In addition and equalling worrying or disappointing is that the next generation really isn't keen to take over. They will have seen their parents working long very long hours or just sick of those endless dinner time conversations about the business. They may even have a passion to do something completely different. Heaven forbid ! Family businesses don't have to bury their heads in the sand and hope... By gathering the whole family to take part in my Discovery Workshop is the first step in facing the future head on. It's a safe space, where listening is the top priority. And it's just ONE DAY. Employee ownership can be explored with all family stakeholders in the room. What, why and how does it work? https://lnkd.in/eAGGV3CY "Don't be afraid to ask for what you want. Everyone is listening" #employeeownership #succession #familybusiness #businessfamily #explore #innovate #reward #spreadtheload #inclusive Paul Lyndsey Harmet Dr Jason Wouhra O.B.E. Dr_Mohamed El-Tahawi Julie Pauline Paul Mary Helen Dr. Arshi Mairi David Helena Sharon Aina Rose Chrisinda Siv Abdulrahman Steve Jane Steve Paul Gaius Jeremy Lisa Geraldine Av. Arb. Alper YILMAZ Khawaja Seniz Jon Rita Gerald Tony Rebecca Amalia Elizabeth Glenn Rick Mounfield