Your Business to Your Kids
I bite my tongue every time someone suggests transitioning a
business to a family member. Family businesses are wrought with
problems. Here are the top seven reasons not to transition your
business to your kids:
1. What if your son or daughter is smarter than you?
The one thing your business can’t give your kids, and the one
thing you can’t buy them as a parent, is the self-esteem that comes
from knowing they are succeeding on their own.
2. What if your son or daughter is dumber than you?
your child lacks your smarts, intuition, acumen, etc., he or she
will forever toil in your long shadow. Would you want your kids to
feel inferior for the rest of their lives?
3. What if your kids are lazier than you?
second- and third-generation family members feel entitled to the
fruits of the family business. Do you want to raise spoiled kids and
4. Your kids may not want to run your business.
No matter how successful and profitable your business, your
kids may not want it. Would you want your kids to resent you for
guilting them into the business down the road?
5. What if you pass on a jalopy?
If nobody else would buy your business, why would you want to
lock your kids into the same handcuffs you’ve worn?
6. What if you alienate your employees?
As soon as you invite your newly minted MBA son or daughter
to work in the business, your professional managers will dust off
their résumés, realizing that Junior has won the lucky-sperm lottery
and is about to leapfrog them on the company ladder.
7. What if you upset your other kids? Would you want to irrevocably change your relationship with
the children who are not invited to replace you?
A better option is to sell your business to a strategic
buyer, corporate refugee, company manager or private equity group or
maybe even go public. Buy lunch for an M&A professional or a
business broker and ask for his or her advice. If you’re desperate
to give your kids a helping hand in life, sell your business and
give them some of the proceeds.
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