Family-owned businesses in the United States comprise 80% to 90% of all business. Of these businesses more than 30% of all family-owned businesses survive into the second generation. Twelve percent will still be viable into the third generation, with 3% of all family businesses operating at the fourth-generation level and beyond. (Joseph Astrachan, Ph.D., editor, Family Business Review).
This survival rate is due to lack of planning . Of CEOs due to retire within five years aged 61 or older, 55% have not yet chosen their successor. And only 19% of family business owners have any estate planning other than a will (Raymond Institute/MassMutual, American Family Business Survey, 2003). It’s no wonder the survival rate of family businesses is not great. What is going on? Time and intention. It takes time and intention to identify and groom a successor. It takes time and intention to prepare the company, the family and the other stakeholders for the transition to the new CEO. It takes time and intention to adopt an estate plan that ensures succession. The time needed is a minimum of 5 years and better to have 10 years. The intention comes from a desire to keep the business in the family.
