For owners of family businesses, nearly half want to keep the business in the family – but, only 13% believe it is very likely that it will actually happen.
Who’s Going to Take Over the Family Business?
There are an estimated 5.5 million family owned businesses in the U.S., and about 40% of those businesses get passed on to the second generation of family members. But, that percentage drops significantly when it comes to the business staying within the family beyond that – only 13% and 3% of family owned businesses pass on to the third and fourth generations, respectively. About half of the owners of a family business (48%) would like for a family member to eventually take over, and when the business has 20 or more employees, that percentage increases to 62.5%. However, the reality is that only 36% think it is likely (23%) or very likely (13%) that a family member will actually take over. Only 7%* of operating businesses were inherited. The average life span of a family owned business is 24 years.
*As of 2007
Source: National Federation of Independent Business (NFIB), Family Enterprise USA (FEUSA), Businessweek.com
Going into business with a family member? Thinking about taking on an investor who is a family member? Want to make sure a family member takes over your business? Check out these resources to make sure your family owned business is a success:
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