She shrugged, "Too bad that he cannot have the company but I am not ready to hand it over."
This is how the Queen must feel with Prince Charles wanting to take over the throne; he is simply not ready or competent enough. As I chatted with this entrepreneur and mother about her succession plans, she expressed her frustration. Despite having her eldest son running her business, I sensed she, like the Queen, did not respect his ability to take the ball and run with it.
"Succession planning is my biggest issue. All my money is tied up in that one business. Can you imagine that?" she worried.
Yes, I could.
I see it all the time. Owners do not know their options available. Meanwhile, they jeopardize their entire family wealth. McKinsey and Co have researched the results of handing family businesses to elder sons and the results should make this mum stop, "gulp" and take another look at using private equity.
Family-owned companies run by outsiders appear to be better managed than other companies, a study finds, while family-owned companies run by eldest sons tend to be managed relatively poorly. Moreover, the prevalence of family-owned companies run by eldest sons in France and the United Kingdom appears to account for a sizable portion of the gap in the effectiveness of management—and perhaps in performance—that we observe in their companies relative to those of Germany and the United States.
These findings come from a study of more than 700 midsize manufacturers in France, Germany, the United Kingdom, and the United States. The study, conducted by McKinsey and researchers at the London School of Economics,1 looked at the quality of key management practices relative to performance metrics (such as total factor productivity, market share, sales growth, and market valuation) and found that they are strongly correlated.2 On a scale of one to five, with five being the highest, US and German manufacturers scored best on these metrics (3.37 and 3.32, respectively), while French and UK companies scored worst (3.17 and 3.09).3