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Family Businesses: Only 12% Reach Third Generation
13 Aug
Summary
- Only 12% of family businesses reach a third generation.
- Optimism, not just documents, threatens family firms.
- Succession planning is often delayed due to priorities.
A recent Goldman Sachs report highlights that merely 12% of family-owned businesses remain under family control into the third generation. This statistic underscores the complexity of intergenerational succession and ownership.
While family firms often outperform others long-term, maintaining family control becomes increasingly challenging as interests diverge. The report suggests that delaying formal succession planning stems from founders' focus on immediate business growth and a desire to postpone difficult decisions about leadership and ownership.
Goldman Sachs advises separating economic interests from voting rights and using tools like private equity to preserve family control. The firm emphasizes that success hinges on a family's talent pool, willingness to work together, and structured governance, regardless of ownership structure evolution.
