In last week’s post, we shined a spotlight on the complicated relationship between the family business and the business founder. I frequently describe Business Succession Planning as “the most neglected area of estate planning.” Many founders have a deep emotional attachment to their family businesses. They can’t bear the thought of planning for the day they are no longer running the business. In my own upbringing, the family business was to be nurtured and raised, almost like it was another child in the family. I can still hear my dad Julius Blum’s voice: “If you take care of your business, it’ll take care of you.” Yet with all that love and affection, only one-third of family businesses successfully pass from G-1 (Generation One) to G-2. Even worse, only 10% pass from G-2 to G-3.
Why the low survival rate? The HBO hit “Succession” offers one cause. Billionaire Logan Roy, although in his 80’s, refuses to yield control of his global media empire Waystar Royco to anyone, even his four adult children. Although fictional, the show’s writers drew inspiration from real-life media moguls the Redstones (who control ViacomCBS Inc.) and the Murdochs (who control The Wall Street Journal). It’s hard for the founder to pass down control. But for the health of the business, there comes a time when the patriarch needs to switch from being quarterback to being the coach (in the words of renowned family consultant Matthew Wesley).
Though the “Succession” story may be painful, many business-owning families can relate. If nothing else, it’s instructive on how toxic behavior can destroy a business and a family. The Wall Street Journal covered this topic in “Succession’s Family Business Drama Hits Close to Home for Some Fans” (November 5, 2021). The article describes how the show “pinched nerves every now and then” for Steve Smith, owner of a family architecture firm: “We identified that this is what we don’t want the family to become. The show has put that top-of-mind again and again and again because it’s so addictive to watch.”
“Succession” is even part of the curriculum in a course at Northeastern University called Examining Family Business Through Film. Professor Kimberly Eddleston describes the show as “a case study in how some founders feel entitled to run their companies until they die, and how some potential successors feel unworthy to take over.”
At The Blum Firm, we have witnessed too many real-life dramas on family business succession. Seeing those has caused us to develop “Business Succession Planning” as one of our law firm’s main offerings. There’s no one-size-fits-all solution. Regardless that the solutions are each unique, the process is generally the same. Hence, we created a Ten Step Business Succession Planning Roadmap:
- Start the Process
- Create an Action List
- Form a Planning Team
- Manage Expectations
- Identify the Issues
- Define the Desired Outcomes
- Search for a Solution
- Get Buy-In from Key Stakeholders
- Address the Challenges
- Implement the Solution
We’ll walk you through the specifics in the coming weeks. Suffice to say that at the end of the process, you’ll identify a solution that fits your business and your family. You’ll improve the odds of preserving the family business as a meaningful legacy for future generations. Our goal is to put you in the category of Alan Rosen, CEO of family cheesecake empire Junior’s Restaurants and Bakery, who fought his senior generation to expand beyond their original one store in Brooklyn. Learning from Logan Roy’s mistakes in “Succession,” Rosen is committed to a smoother business transition: “I, unlike Logan Roy, will have a plan.” The Blum Firm would be honored to help you have a plan, too.
Marvin E. Blum
Marvin Blum draws lessons from the TV series “Succession” to help in real life business succession planning.