Finally, succession of ownership is another stage of transition from one generation to another. This often represents the severing of a technical connection to the business for the incumbent in place of one that is more emotional. While it can occur at one point in time it is often preferable if it occurs over an extended period. Depending on prevailing regulations tax consequences may make transitions very difficult. Family relationships are often impacted at this point as well that can often add stress to a new leader. If the business represents the largest asset of the current owners, there is often an inclination to share ownership with the next generation in the business as well as those who are not in the business. This can lead to sibling power struggles and frustration for all.

If the ownership transition is not structured well, the outgoing leader may not have sufficient capital to sustain his or her lifestyle, or the successor may not have a business sufficiently capitalised to continue successfully. There are many considerations and strategies that can lead to successful succession of ownership, which accountants, lawyers and financial planners can address as they organise the business and plan for such effective transitions.

When leaders of family businesses think about succession planning, typically they are thinking of who will replace the Chairman or CEO – i.e. who will manage the family business. Some go further to think about who will own the business when the current owners are gone: succession of ownership. But we have found that what differentiates succession in a family business context is that it is defined by seven dimensions, not just two.

These seven dimensions of succession planning should be addressed in a process that begins with a vision: what is the future that the family envisions for itself and its assets? When the family considers its future together (rather than just the family leader), it increases the prospect that the transition to the next generation will be successful. Having an open dialogue that includes the individual and collective vision and goals of family members helps everyone consider how they can support each other in achieving individual aspirations and how the family assets play into this future. This open dialogue should be continued in exploring what talents and perspectives are needed in all roles in order to achieve a shared vision for the family and the business.