In a recent article in the Globe and Mail, "Good Lawyers Get Up Close and Personal with Family Businesses", Jacoline Loewen discusses how to successfully transition a family business.
Specifically, she highlights the role of the lawyer as well as some of the very important non-legal issues that require addressing. Indeed, the importance of properly addressing the non-legal issues cannot be overstated. These issues include the need for meaningful communication among family members and understanding family dynamics, the goals and objectives of the family members and the role (and fit), if any, of the next generation in the family business. For example, in order to successfully transition a family business to the next generation, it is very important for the generation passing the torch not to fetter the discretion of the next generation in how it manages or operates the business.
However, there are some other important considerations when transitioning a family business that the article does not address. For example, it is also very important for family business owners to remember that a successful succession plan is a multi-year task and cannot be created and implemented overnight. Figuring out the big picture and the potential role and aspirations of the next generation takes time and candid communication. Moreover, it is important to have a back-up plan in case plan A does not pan out. Very often, in my experience, succession planning will involve transferring a family business to an unrelated third party.