Source: Fortune
Summary
Goldman Sachs has released a playbook for family-owned businesses, highlighting the challenges of maintaining control across multiple generations. According to François-Xavier de Mallmann, chairman of Goldman Sachs’ Investment Banking division, the biggest threat to family businesses is optimism. Only 12% of family-owned businesses make it to the third generation still under family control. De Mallmann attributes this to the fact that family interests can diverge over time, and decisions around succession and ownership can be complex.
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The numbers tell one story. Goldman Sachs’ playbook for family-owned businesses reveals that optimism can be a major obstacle to successful succession planning. De Mallmann notes that founders often underestimate the challenges of maintaining family control across generations. The bank’s advice includes separating economic interests from voting rights and considering outside capital to preserve family control. However, de Mallmann acknowledges that every situation is unique and requires a tailored approach.
The biggest threat to family businesses is not a lack of planning, but rather the founder’s optimism about the future dynamics of their family. De Mallmann’s advice is to start conversations about succession planning early, as it gives families more time to prioritize and adapt to changing circumstances.
Ultimately, the decision to maintain family control or seek outside capital is a nuanced one, driven by the specific needs and goals of the business and family. Goldman Sachs’ role is to provide independent advice and help families make informed decisions about their future.
