The US Bank of America Study was long overdue. With an unprecedented number of ageing family business owners the study has put the spotlight on an often ignored subject -- family business succession planning. The study notes that four out of five family business owners would like to pass their business on to a family member. It is here that most family business owners stumble. Many business owners, as the study suggest, simply don't formalize or update their plans and the owneship of the business gets dealt with at the estate level when the controlling shareholder dies. In effect the family business gets "gifted". In my new book, Every Family's Business, I argue that gifting operating businesses is one the biggest mistakes that families can make--one the surest ways of destroying family relationships and family wealth and not usually in that order. Instead I argue in my book that family businesses should be purchased, that the very act of risking capital by the succeeding generation is critical to the future success of the business and its leadersip. In significant family businesses, wealth can be gifted to the succeeding generation to fund the purchase. This gifted wealth still represents a risk of capital since the recipient is forgoing the personal consumption of that wealth or its investment in firms outside of family control. when this critical stp is taken the succeeding generation has taken an important step to invest their monetary capital and human capital to lead the family business as a true "owner" --one that has risked his capital. The business is poised for success. All too often families fail to plan or simply gift the ownership of their business to the next generation. How many more examples do we need to underscore the point that families with signficant wealth should gift their wealth not operating companies? If children in a family business express no interest in aquiring their parent's family business the business should explore its sale to a third party. When businesses are gifted to disintrested children that have taken "a pass" on owning a business the seeds of wealth destruction have been planted. When succession planning doesn't get done or when families gift businesses to their children through planning neglect, the outcome is predictable: family's destroy their wealth, their reputation, employees lose their jobs, lenders lose their capital, suppliers lose their customers and America loses an opportunity to sustain the most successful wealth creation organization on the planet --the family business.

Thomas William Deans
Author
Every Family's Busniess: A Blueprint for Protecting Family Business Wealth

www.ProtectingFamilyBusiness Wealth.com

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