The #1 Reason a Family Business Transition Will Fail…or Succeed
by Chuck Meek
I'm not a licensed pilot, but I sure get a kick out of aviation.
Flight, especially the powered kind, just seems to drop metaphors
from the sky - perfect for illustrating narratives. Consider
this: there are two major types of flying machine - fixed
wing (airplanes) and rotary wing (helicopters). Both use an
engine to force their flight surfaces through the air, creating
lift. An airplane uses a jet engine or piston engine to
propel its wings forward, and a helicopter uses its power plant to
rotate its wings for exactly the same effect. Same resultant
lift, but vastly different methods.
Airplanes can be beautiful, and sleek lines are both pleasing to
the eye and functional: less drag means more lift.
Helicopters, though, don't have to worry as much about sleek lines
and aerodynamic shapes. After all, as the old saying goes,
helos don't actually fly, they just beat the air into
submission. That's not true, of course, but they do fly
differently. Cut the power to an airplane and a helicopter
flying side by side at 3,000 feet and which one do you predict will
Some Family Businesses are
Airplanes, some are Helicopters
And the same can be said about Family Business Owners.
It's not empirically robust (yet), but I would argue that the
controlling owner's gender -and his/her spouse's role - will play a
significant part in a transition. In their groundbreaking
book "The $14 Trillion Woman," Barbara Kay and Anthony DiLeonardi
explore the differences between male and female investors - how
they set goals and reach critical decisions. To paraphrase
them, men tend to be more goal oriented and women set their sights
more on security and freedom. Similarly, male and female
stakeholders view things the same way. In some
multi-generation family business transition scenarios, a patriarch
is more likely to focus on enterprise value and multiples to reach
a clear monetary threshold, enough to buy that lake house, red
Ferrari, or other tangible goal. The matriarch, of course,
wants enough to enable them to live their dreams, but not if it
tears the family apart in the process.
Family Business Transitions
Succeed or Fail Because of Communication
Remember: FOB|BOF - the family owned business and business
owning family are opposite sides of the same coin; they are
inextricably linked and affect each other immensely. The
solid vertical line between them represents a coin, a mirror,
and/or a barrier - of language. Business models and
strategies have always been written in the language of the FOB, but
if a transition is to succeed they MUST be written in a language
understandable by both the FOB and the BOF.
Don't misunderstand me: I don't just mean rephrasing them
with different words. I mean business models and strategy
plans envisioned, created and implemented by the entire BOF for its
own goals and objectives, using the FOB as a critical resource to
A transition shouldn't be the final chapter in the story of the
Family Owned Business, it should be the next chapter in the story
of the Family.