I recently had a conversation with a client who said, “A lot of what you write about is how to transition ownership and legacy from one generation to another…but what about those of us who are considering selling the legacy business? What about our dilemma?”
So I decided that I would give it some thought through writing about it.
The Dilemma: We have tried to be good stewards of the business we have been given through our work in the family business, our oversight on the board, and the role(s) we play in the family and community. We have appreciated the assets we have been given. However, our lives have taken different paths, the industry is not the same and frankly, the continuation of the business without the infusion of much debt or sharing of equity would not be good stewardship of this asset. Even more so, the passion isn’t there anymore.
So, as our friend Jay Hughes has suggested, without the energy that comes from personal passion, a business will die (see, for instance, his thoughts on the matter in The Rising Generation).
The legacy of most families, however, is more than the business. In addition, there is often a “spiritual legacy” that encompasses the lessons, values, principles, stories, and wisdom that can be shared from generation to generation. There are also pieces of a legacy we often might choose not to pass on, such as addiction, abuse, suicide, long-term conflict, and/or obligation to continue a destructive relationship, or unrewarding business.
Transforming the legacy means, to me, taking the best of the family’s financial, spiritual, relational, intellectual, and other forms of capital and passing them on in a form that will be productive for current and future generations. Some examples include:
In one family, the founder created a somewhat successful business from which his sons took the baton and continued, through good times and bad. The father originally built a very small business, but as the sons took over, they had to learn good business practices in order to grow the company. At one point, they were so close to bankruptcy that they felt their faith was the only thing that saw them through it. However, because of this experience, the sons committed to sharing their success with the employees who stuck it out through thick and thin. This experience also inspired the sons to tithe. Their legacy was not just a financial one, but a very concrete manifestation of the faith in what they shared. This legacy passes on to the next generation on paper in legal documents and also in the hearts of their heirs.
In another family, the rising generation (4th) faced the conflict of their elders (3rd generation), which prevented them from constructively collaborating in the stewardship of their family and its assets. They came together, determining that conflict would not be their legacy. They committed to enacting certain practices and processes that would keep communication open and direct. They also committed to creating their own vision of the future that built on the strengths of the family and business, leaving behind the “shaky” footing of the previous generation.
Another family captured the heroic history of their ancestors in books and videos about the family and their endeavors. They sold the legacy assets and built new businesses that were relevant to today’s market. So while honoring the values, courage, and business savvy of the founding generations, they pursued a new path that captured their imaginations and hearts, ultimately leading to financial success.
Finally, another family took the difficult path of saying they would be better off not collaborating as business partners, but rather finding a way to stay connected as a family, which they ultimately deemed more important. They honored their roots as blood relatives and worked hard to rebuild relationships that had been strained by the inability to partner together. They each took a part of the business legacy and transformed it individually, healing the strained relationships. Their gift to the next generation was the opportunity to have holidays together, to remember the ups and downs of the family history, and to create new traditions.
Research at Emory University has shown that children who have heard stories about their ancestors are more resilient than those who have not. These ancestral stories help children feel they are a part of something larger than themselves, fostering an enduring identity that holds generational meaning. So, when the going gets tough, children know others might have solutions as the family goes back generations.
Moreover, kids who have heard stories that included the “ups and downs” also understand the cyclical nature of life, and that when you hit rough spots, it isn’t the end. These resilient offspring have a legacy that gives them context and hope during the most difficult times, as well as stories of achievement and dreams that can propel them further. As such, I think that part of the answer to my client’s question about passing on legacy from family to an outsider is to look to the stories, traditions, and creative possibilities that can be passed along no matter what physical assets exist. These may ultimately be more powerful as they provide the tools with which new legacies can be built.
Original post can be found at Current Thinking Column by Aspen Family Business Group