Successful entrepreneurs are often control freaks. But they can’t control whether their children can take over the business or the assets and keep them growing.
Entrepreneurs may be visionaries, but sometimes it takes an external advisor to identify choices that they might otherwise overlook. Transferring full control of an operating asset to children isn’t the only option. Neither is continuing the way things have always been done just for the sake of it.
The drive towards impact and ESG investment is running in parallel with the generational wealth transition. The stereotype that it is just young people who are interested in ESG investing is quickly becoming out of date. Often, parents say that they support this investment choice but when they were setting up the business in the beginning, their focus was on profitability. A common interest in environmental, social and governance investing can help parents and advisors connect with the rising generation.
That said, a change in investment approach driven by the rising generation can be a source of conflict, and needs to be handled judiciously.
For effective wealth transition, it’s important for families to learn how they can create value together through increased understanding of each other and a shared vision of their family’s future.
Consider This: What has your family done to raise the next generation of entrepreneurs? Are you able to deal with “Dad: I have a great idea – can I have a million dollars to invest in it?” Has your family experienced intergenerational conflict over investment decisions?
Original articles: https://entrepreneurship.babson.edu/power-of-entrepreneurial-family/, https://www.marketwatch.com/story/how-to-know-if-your-children-are-ready-to-take-over-your-business-2020-10-20, https://www.ft.com/content/dea5e5d1-8650-4819-aecc-699b612419aa, https://www.ftadviser.com/investments/2020/12/10/who-is-making-the-esg-investment-choices/, https://www.ftadviser.com/investments/2020/11/25/how-esg-can-help-succession-planning/
Actionable Generational Wealth Succession: For more in-depth, thought-provoking discussion points and commentary on family and business, access my Familosophy newsletter archives: www.transitionbook.co/member-area/