Family Business Transition
Understanding the “Me” Generation

By Dianne H.B. Welsh, Ph.D., SHRM, and Ted Shalek, CPA, CVA, MBA
Published: January 2008

What are your expectations and their reality for passing on the family business? Perceptions are reality, as they say. That is where the problem lies. Do you know the realities of those who were born in the 1970s, 1980s and 1990s? This is probably the group to which you will either be selling your business or to which you will be passing it along. The Associated Press has called them “The Entitlement Generation,” while Dr. Jean Twenge calls them Generation Me (2006). According to responses from 1.3 million respondents spanning six decades, this generation is profoundly different than previous generations. Needing constant praise and fulfillment, this generation is tolerant, confident, open-minded, and ambitious, but also depressed, lonely, anxious and cynical (Twenge, 2006).

Are you preparing your family business to be passed on to this generation? To be sold to this generation? How about marketing and selling to this generation? Appealing to the entrepreneurs? If not, your business may not succeed. Being prepared to make crucial decisions that will affect the future of your business is the key to succession planning. Entrepreneurship is the key to this generation and successful family business transitions (Welsh, 2007).

Here are 25 key factors to consider:

1. History of the business: Who founded it? How did you acquire it? What generation is the business currently in?

2. What is the culture of the business? The history, norms, stories, morés that define the business?

3. What is the current composition of the ownership?

4. What is the current family structure? i.e., brothers, sisters, uncles, aunts, nieces, nephews, grandparents - as it relates to the current ownership structure?

5. What is the current management structure of the company? Who actually runs the day-to-day operations? Family or unrelated employee with particular skills and talents?

6. What are the financial and non-financial employee and family reward systems?

7. Who needs to be supported by the business? How many families?

8. Have the family members that have been brought into the business been accepted by the non-family management team?

9. Have the children worked in the business? And if so, do they have the passion to continue the business? And do they have the required skills to manage the business?

10. Have you given the next generation the opportunity to be entrepreneurial?

11. Have there been any major family disagreements about the business? Management? Finances? Compensation? Dividends?

12. Who is the heir(s) apparent? Are there any?

13. Does the company have a retirement program?

14. Is the current non-family management team adequately compensated?

15. Have any of the non-family management team members been promised future ownership of the business?

16. Have you had the value of the business analyzed?

17. Do your family members “expect” you to give them the business without payment for the value of the business?

18. Have you done estate planning without considering future management of the business assets?

19. Who has the financial resources to buy the business?

20. Are you willing to wait for complete payment over a long period of time? Do you trust the family members that will buy the business from you? Do they have the financial and management skills to make the business perform in a manner that will insure the payment of your sales price and provide adequate compensation for their own families during the payback period?

21. Do the family members who will buy the business have similar ethical, family and business values?

22. Have you considered all of the psychological considerations of the transition?

23. How old are you?

24. Where do you want to be five or ten years from now? What will it take for you to fulfill your dreams?

25. HAVE YOU STARTED TO PLAN?

Each family business faces these issues at different points in the family business lifetime. You must begin to plan, starting today, for the smooth transition of your business to the next generation of ownership. Study these questions and discuss with your family business members, significant non-family members, and your family business council or advisors, if you have them. Understand how each relates to you and your business and then contact the professionals who can help you transform your dreams into reality.

Copyright Family Bus First, Int’l, Inc. Cannot be used without written permission of the authors.

Dr. Dianne Welsh, SHRM, holds the James W. Walter Distinguished Chair in Entrepreneurship and is the Founder and Director of the Florida Entrepreneur & Family Business Center at The University of Tampa. She is President of Family Business First International, Inc., an international entrepreneurial consulting family firm.

Ted Shalek, CPA/CVA, MBA is CFO of Lindell Properties and formerly owned Shalek & Associates, CPAs, Inc. in Cleveland, Ohio for thirty years. He is Vice President of Family Business First International, Inc., and focuses on the financial aspects of family businesses.

Twenge, J.M. (2006). Generation me. New York, NY: Free Press.

Campbell, N.D., Heriot, K.H., & Welsh, D.H.B. (2007). The black box: Unraveling family business succession. New England Journal of Entrepreneurship, 10(2), 9-14.