Some 70 percent of family-owned businesses fail or are sold before the second generation gets a
chance to take over, according to a 2012 Harvard Business School study. This is especially true
in case of a family business. Family businesses often fail after succession due to :
Lack of a capable heir
Business owners often get their children involved in their companies with the assumption that
they will be able to groom a capable heir to take over when they retire. When it's time to
transition ownership, however, owners sometimes realize that their child may not possess the
right combination of skills, education, maturity, or even desire to run the company. Regardless,
some owners may pass their companies on to an unqualified heir, even though it may not be in
the best interest of the business or the family.
Poor tax and estate planning
Tax planning is one of the most important parts of succession planning. Family business owners
need to be mindful of the tax liability that will be created when the ownership of their businesses
is transferred upon retirement.
Sentimental value of the business
Relatives involved in the ownership and management of a family business often see more
sentimental value in their company than management at non-family owned enterprises. When
determining the future of a business, this emotional connection could create tension and cause
conflict among management, which in turn can have a negative impact on the company's
Think Business Africa is organizing a private banking wealth management forum that will
address among other factors;the need for family wealth management to aid businesses in
The forum will be held on 21 st & 22 nd March at the Radisson Blu Hotel Nairobi.