The Challenges of Generational Wealth Transfer And the Family-Owned Business

In our last blog post, we discussed the top 5 reasons business owners do not have an exit plan. We received follow up questions regarding generational wealth transfer, thus thought we might like to expand on this topic.

We asked CKS’ Managing Director of Advisory, David Asmus, to explain the common questions and solutions that can make or break a transaction of this type:

“Generational wealth transfer is a challenge. This is particularly true when a family-owned business is involved. The legal, tax, and technical issues are daunting enough without the additional emotional aspects of transitioning the parent’s business to the next generation. Certainly, this challenge poses the question- will such a transition succeed, or be part of the significant majority that fail in these efforts?

We have found many families are reluctant to address the transitional challenge. The fact is, the health and longevity of a business depends on good, solid planning. This will increase the likelihood of a family-owned business surviving and thriving towards lasting value.

CKS approaches the family-owned business transition process by assessing key factors such as, (1) family members assuming control (and under what specific, protective terms for such assumption), (2) no successors in the family (where perhaps a family trust may be appropriate), or (3) selling to a third party outside of family ties. We work with legal and tax advisors for the family to develop a strategic plan and implement that plan towards, a hopefully successful transition.

The transitional planning process is vitally important as such decisions affect not only your business, but also your family, your employees and your customers. It is very wise and prudent to engage the services of experienced, qualified counselors and advisors to assist in business succession planning sooner, rather than later.”

These challenges are possible to overcome. There are hundreds of successful business transitions that happen every year to family members. Recently, CKS Securities assisted Greenleaf Paper in a transaction between father, son, and a Private Equity portfolio company. The father retired after 35+ years of running his company, his son became COO of newco, and the CEO of the Private Equity portfolio company remained as CEO. The new company is now thriving and gaining significant market share in the paper converting space.

Speak with your professionals early to determine if this type of transaction is right for your company and your family. It is also possibly a good investment for the company’s future to hire an advisor to assist in the preparation of the company.  If you would like to learn more about CKS Advisor’s services, please click here.

About Dave Asmus

CKS Advisors Managing Director David Asmus brings more than 35 years of professional experience in business transactions counseling to his clients. His experience includes advising buyers, sellers, equity investors, and financial institutions on mergers, acquisitions, succession planning, and related transitional matters.  He retired from his legal practice in January 2018.

Prior to joining CKS Advisors, Asmus was a partner in several St. Louis, Missouri law firms where he represented business ownership interests and local, regional and, national banks as well as commercial finance groups regarding a wide range of transactional matters. Over the course of his professional career he handled numerous complex M&A transactions as well as workout, restructuring, and reorganization matters for lenders and business interests.

Education: Asmus received his J.D. from St. Louis University and his B.A. from Saint Ambrose University in Iowa.

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