You might be familiar with the Freakonomics books written by Steven D. Levitt and Stephen J. Dubner. Freakonomics also has a very interesting podcast and has an episode where they delve into the numbers regarding scions (descendants of notable families). What are the chances that a scion is a perfect person to take over for a company?
As it turns out, the chances aren’t that good, and in almost every case a large company should not transfer operations of a company over to the children. It didn’t work with Anheuser-Busch and it didn’t work with Ford.
What about you? Why is it that you might want to consider selling a business through a mergers and acquisitions firm instead of passing it on to your children?
They Might Not Be Interested: Sometimes a child simply isn’t interested in the family business. Maybe they saw how much it consumed your life and aren’t interested in working that hard. Or perhaps they simply hear a different drummer and want to follow their own dreams. Either way, passing the business on to them could doom your business and their ambitions.
They Might Not Be Right For The Job: The podcast mentioned above lays it out with a simple question: “What are the odds, in a world of seven billion people, that your child is the perfect person to run the company?” Certainly, they might be more qualified than the average person because they grew up around the company and might know its culture, but the chances that they have the same drive and business acumen is unlikely.
You might have always had dreams of passing your business on to your children, but if they aren’t the right fit for leadership then perhaps selling your business is the right course of action. If you have questions about mergers and acquisitions and are considering selling, contact Trinity Transaction Advisory and we can give you your best options.