Alternatives to family succession

WHAT TO DO IF THE CHILD IS NOT UP TO IT,
WANTS TO DO SOMETHING ELSE IN LIFE OR IF THERE ARE NO CHILDREN
 

Family successions are not always possible,  – that is when there are no heirs or heirs are physically or psychologically unable to pass the baton – but also in cases where there is no interest to do so. The importance and complexity of family businesses are often due to factors such as size, the legal status of a business linked to the person, and, above all, the mixture of business and family in which it becomes difficult to distinguish boundaries.
The complexity of personal and emotional relationships, intertwined with capital issues ends up strongly and mutually influencing the business and family.
Particularly in SMEs, the functions of ownership, control, and management of the company are often concentrated in one person: the entrepreneur.
Family succession is therefore a highly critical moment for the multiple implications that can be created, both within the family (personal relationships, assets, etc.) and within the company (corporate structure, governance, powers, etc.). However, the decision to entrust the company to a family member cannot be an inevitable fact. There are situations in which the family fails, cannot or should not find within it the figure of the one who will have to ensure continuity in the company.
Family succession can be an opportunity for the company to develop and prosper, but it can also become a threat to its survival.
During a family succession project, it may emerge that there are no worthy successors within the family. This situation can be both permanent and temporary. Although an entrepreneur may always decide to entrust the management of the company to a child who does not have the necessary leadership skills, it is nevertheless possible to identify some possible solutions for the continuation of the business activities.
In these cases there are several possible options, to be evaluated and deepened on the specific peculiarities of the individual company/family:

1. The purchase of shares, be it a family member or not;
2. The inclusion of external management in its various forms;
3. Future corporate governance;
4. Establish a holding company.
5. Stock Market.
6. The complete sale of the company.

Extract from the book “Come gestire il passaggio generazionale nelle PMI italiane”, by Gian Andrea Oberegelsbacher & Leading Network, published by WKI (Ipsoa) 2017