Passing the Baton: The Importance of Succession Planning in Business
December 20, 2006
The baton may go to those who plan best, not to the swiftest.
Succession: The $10 Trillion Question
An article posted on the Small Business Administration’s web site (Family-Owned Business Success: Leveraging Advantages and Mastering Challenge, September 2005) claims succession has become a pressing issue for family-owned businesses. “Post-World War II entrepreneurs created the world’s greatest wealth and by the year 2010, they will be retiring and passing the baton of leadership in unprecedented numbers.” One economist estimates that this will result in the transfer of approximately $10.4 trillion of net worth by the year 2040—with $4.8 trillion of that transfer occurring within the next 20 years. “Though inevitable, succession is often the least planned and, consequently, the most perilous event for a family business. History has shown that only one in three firms will survive the transition to the second generation. Only 10 percent of the original group will survive into the third generation of ownership.”
A Relay Race
Like a well-run relay race, to be successful the handing over of a company should be graceful, carefully strategized, and well executed. A well-thought out succession plan…
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by: Martin C. Dunn, Esquire
Business to Business