Family Businesses Rarely Transfer to the Next Generation — Here’s Why It Matters

Many U.S. private company owners dream that someday their children will want to take over the business, then successfully grow it to new levels, thus preserving the family’s financial and reputational legacy that took years of scrimping and hard work to build. For most, it truly is a dream, as relatively few prosperous businesses transfer to family members. While reliable data is elusive, one study indicated that of those which do — variously estimated to be 10-30% — less than two-thirds of them survive the second generation under the same company name and ownership, and only 13% of successful family businesses last through three generations before being sold outside the family, merged, or closed. Women May Help Intra-family Succession Will the number of intra-family transfers increase with an ever-building pool of women asserting a desire to take over the family business? Since women have steadily progressed from workforce participants to founders over the decades, it would seem reasonable to assume that more qualified women will express interest in controlling their family’s business. Reportedly, about 25% of family businesses are now run by a female president or CEO. Perhaps that will be around 50% in another decade.