“Shirtsleeves to shirtsleeves in three generations” is the cautionary warning used to describe the propensity for family-owned businesses (FOB) to fail by the third generation. Unfortunately, the numbers give credence to the warning:
- 70% of FOBs fail or are sold before the second generation takes over
- Only 10% continue as active, privately held companies that successfully transition to the third generation
- And only 16% of family businesses have a documented succession plan in place
Harvard Business Review, Avoid the traps that can destroy family businesses
Boston Globe, Family Businesses have no succession plan
Boomers will inherit approximately $750-billion over the next decade.
Wealth invites new considerations and new challenges. CIBC says there are currently about 2.5 million Canadians over the age of 75 with a total net worth of $900-billion or more and the beneficiaries will be mainly Canadians currently aged between 50 and 75 years.* Stewardship of family assets and inheritance requires an informed approach that also helps to maintain family harmony. We can help educate family members on the responsibilities and opportunities of significant wealth, and help manage expectations.
*Globe and Mail, June 6, 2016
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