In an interview with Private Wealth magazine, estate planning attorney, Gary Altman, shares his family's personal encounter with business succession gone wrong.
Altman's grandfather started a child's coat manufacturing business in 1934, but died suddenly in 1972, leaving the business in the hands of Altman's father who had zero management experience. While he was able to expand it for a few years, the business remained unprofitable and Altman's father turned down multiple opportunities to sell it. Ultimately, twelve years after Altman's grandfather had passed, the business which had sent seven grandchildren to college, was finished.
Reflecting back on his own family's experience, Altman says, “Many times, the founding member of a business does not nurture and help his or her children to become strong, resourceful leaders. Instead, they want control at all costs and are not willing to share control or ideas or money while they’re alive. So when the founder dies, maybe suddenly, and control passes to a child or children who were not really integrally involved—and who may feel they have something to prove—the younger generation can run the business into the ground.”