Omnia Featured in WealthManagement.com: Family Business Succession Planning Is Never Easy

One of the most common obstacles that family businesses face is multigenerational succession planning. Navigating ownership succession, while taking into account differences among heirs, can present a wide range of challenges. Ivan Hernandez, managing director at Omnia Family Wealth, recently wrote an article for WealthManagement.com that discusses strategies to overcome these challenges and ensure a smooth transition.

“What happens when the heirs of the business have different needs, talents, goals and levels of involvement in the family’s business?” asks Hernandez. “These differences and communication barriers can create major obstacles toward a smooth transition in leadership, which could lead to the ultimate destruction of the company.”

It may seem oversimplified, but according to Hernandez, communication really is paramount to successful succession planning, and it needs to begin when the founders are still in control. This paves the way for properly communicating the founders’ wishes and plans and also gives heirs the opportunity to express their views, concerns or excitement about the business.

In the article, Hernandez suggests using an impartial, non-family third party who can assist in finding solutions. For instance, they can address a situation where one heir genuinely cares about the business, while the other(s) may not. He explains that when some heirs are involved in the business and others are not, they will naturally view the business very differently. If you have a non-involved owner, the conversation around what to do with excess cash flow can become a point of contention. If one heir wants to reinvest in the business and the other wants to take distributions to fund their lifestyle, it can present an unavoidable conflict between the two siblings.

Hernandez also addresses the common question of “When is the next generation ready?” He recommends encouraging the next generation to broaden their horizons by working for other companies. This will give them a greater understanding of hierarchy of an organization and help prevent a feeling of entitlement. This is a critical experience for the heirs of a family business. It’s also an opportunity to assess their passions, capabilities and work ethics.

“As owners of the business and the wealth creators, you have the absolute right to determine the future leadership of the business and what the assets distribution will look like,” says Hernandez. “Now is the perfect time to begin.”

The full WealthManagement.com article is available here.

Important Disclosures: Omnia Family Wealth, LLC (“Omnia”), a multi-family office, is a registered investment advisor with the SEC. This commentary is provided for informational purposes only. No portion of any statement included herein is to be construed as a solicitation to the rendering of personalized investment advice through this communication. Consult with an accountant or attorney regarding individual tax or legal advice.

Receive for Insights

This field is for validation purposes and should be left unchanged.

RELATED ARTICLES

Omnia Family Wealth Recognized In Financial Advisor Magazine’s 2022 RIA Ranking

Omnia Family Wealth Recognized In Financial Advisor Magazine’s 2022 RIA Ranking

Read More
Michael Wagner Comments on Short-term Treasury Market in Bloomberg

Michael Wagner Comments on Short-term Treasury Market in Bloomberg

Read More
Michael Wagner On the Importance of Flexibility in Attracting Young Advisors in Barron’s

Michael Wagner On the Importance of Flexibility in Attracting Young Advisors in Barron’s

Read More
Michael Wagner Shares Financial Moves for Retiring Smoothly in a Bear Market with Money

Michael Wagner Shares Financial Moves for Retiring Smoothly in a Bear Market with Money

Read More
Michael Wagner Explains the Benefits of GRATs in Financial Planning

Michael Wagner Explains the Benefits of GRATs in Financial Planning

Read More
Investing Amid Stagflation: US Wealth Managers’ Perspectives

Investing Amid Stagflation: US Wealth Managers’ Perspectives

Read More
Omnia Family Wealth CEO Steven Wagner Named Among Barron’s Top Advisors of 2022

Omnia Family Wealth CEO Steven Wagner Named Among Barron’s Top Advisors of 2022

Read More
Michael Wagner in MarketWatch: What Cautious Investors Need to Know About the Ukraine Crisis

Michael Wagner in MarketWatch: What Cautious Investors Need to Know About the Ukraine Crisis

Read More
CNBC Interviews Michael Wagner About Investment Mindset Amid Geopolitical Issues in Russia and Ukraine

CNBC Interviews Michael Wagner About Investment Mindset Amid Geopolitical Issues in Russia and Ukraine

Read More
©2022 Omnia Family Wealth, All Rights Reserved.