Capability and willingness of the next generation
When it comes to business succession, there needs to be a realistic assessment of whether or not the business can continue successfully after the transition.
In some cases, the exiting generation will pursue generational succession either as a means of keeping the business in the family, perpetuating their legacy, or to provide a stable business future for the next generation. All of these are reasonable objectives, however, they only work where there is capability and willingness.
The alternative scenario can also exist where generational succession is pursued by the younger generation. In some cases, it’s seen as their birthright. In these cases the willingness will exist but this does not automatically translate to capability.
In either case, the answer needs to be ‘yes’ to all of the following:
- Is the next generation willing and sufficiently committed to take on the responsibility of the business?
- Do they have the capability to operate and run the business?
- Can the capital value of the business be maintained and enhanced over time under their management?