Family Transfer

Family Transfer

A family transfer (family succession) is where business ownership is transferred to one or more children or relatives.This transition alternative is fraught with immense risks.

Many owners inadvertently set up their children for failure. We witness this time and time again and it can destroy families.

We recommend you only consider this alternative if one or more of these factors exist:

  • You have children, or relatives, who demonstrate a desire and proven aptitude for running the business.
  • The successor has earnt his or her stripes outside the business.
  • There may be an established tradition wherein the company has been successfully passed through many generations.
  • The business itself is growing and your family will not get a better investment elsewhere.

Some reasons why you might not consider this alternative:

  • Risks associated with these transitions are extremely high, especially if planned & executed poorly.
  • The business valuation may well result in a lesser valuation than a competitive sales process.
  • Payment of the sale price may be deferred.
  • Will you be able to run the business with the same energy and dynamism while waiting for the heir apparent to take over?

Often owners underestimate the competencies required to run their business, from technical skills to softer interpersonal skills, like managing staff and driving sales teams. Your chosen heir may struggle to match you.

Before going down this path it is crucial you consult with trusted third parties to provide an impartial view on the family successor.

ImportantThe choice of transition strategy requires careful consideration of the consequences and trade-offs involved. We devote a lot of time with clients in choosing the smartest transition decision, that is aligned with individual circumstances.