COVENANT BUSINESS PLANNING SOLUTIONS

Family Values

Family Values are usually based on unconditional love, emotion, support, acceptance, and child development. Management Values exist to generate profit, increase wealth, improve the business, and reduce risk.  These values are typically rational and analytical.  Acceptance and reward are typically conditional on performance.

But in business, Family Values take on an added weight and responsibility. After all, many business owners not only wish to pass on their business to their adult children – they may, in fact, have actually started their business with that very intention.

So, now that you are looking ahead to exiting your business and beginning your own retirement, how viable is the option of passing your business down to your children?

Here are some contributing factors:

  • Do you have one or more ‘heirs apparent’ who have demonstrated aptitude and desire for running the business?
  • Has the business itself been a good investment over the long term?
  • Does your family rely on other investments?
  • Is there already a tradition in your family of passing businesses down to the next generation?

There are also some down-sides to intergenerational business transfers. They include:

  • Lower Valuations - An Intergenerational Transfer may well result in a considerably lower valuation than a competitive sale process.
  • Deferment of Payment – Unlike investors, the next generation usually doesn’t have the cash necessary to pay the market value of the business.
  • Timing - Will you, as owner, be able to run the business with energy and dynamism until the next generation is ready to take over?
  • Higher Risk - There are multiple kinds of risk associated with intergenerational transfers, including the risk that the next generation will not manage the business as well

The best way to know if your children are ready for the responsibility and expectations of inheriting your business is to meet with Covenant Consulting Group. Learn more about our services including our FREE Consultation by calling or clicking now!