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Book Review: Every Family’s Business
I must admit, when I first heard about the book, I wasn't very excited about reading it as the topic isn't very "sexy". However, this all changed once I dove in.
Here is some food for thought, did you know that only 1/3rd of ALL family business survives to the next generation? On top of that, only 10% of the 1/3rd make it to the third generation? Could family business succession be that poorly handled? That's what this book has to offer. It discusses the main issues with family business succession and the plan to take to ensure that the transfer of wealth is achievable.
Who is Thomas William Deans?
According to the back of the book:
Thomas William Dean, PhD, is a sought after speaker on family business and succession planning. He is president of a large multinational family business for almost a decade; two generations of his family have founded, operated and sold their private and publicly traded companies for a combined value exceeding $100 million. This start-and-sell approach, guided by the annual review of a series of questions, has profoundly shaped his unique view of family business.
What is the Book About?
The book flows like The Wealthy Barber (my fav pf book) where the author brings his concepts to life through a story between everyday people. In this case, the story is between 2 successful businessmen both of which have sold their businesses for a substantial amount of money. That's where the similarities end however. After their businesses sold, one of them (William) maintained a healthy family relationship while the other family turned completely dysfunctional.
Apparently, it's very common for family business succession issues to cause a rift in family relationships, especially is there isn't a plan in place from day one. That's where this book comes in. The story explains what can happen without a proper plan from start to finish and steps you along the way on how to master family business succession planning.
More specifically, there are the 12 questions that should be reviewed every year between the parent (owner) and the children (potential owners). These 12 questions are what William used every year with his father which resulted in a lucrative business sale along with everyone being content with the deal. His plan has made it through 2 generations and has passed over $100 million in wealth through the family.
Conclusions
If your family owns a business, whether the owner is you or your parents, this book is a MUST READ. It will explain all the questions that must be answered to avoid going down the wrong path with your parents/children/siblings.
Even if you don't own a business, the book has entertainment value where it is filled with humour and wit. Not only that, you'll pick up some of the issues that big business owners have to contend with. Who knows, it could be you one day.
Book Giveaway:
Dr. Deans is very generous with giving away his book. Stay tuned for tomorrows post where Every Family's Business will be given away to 5 lucky MDJ readers.
15 Comments, Comment or Ping
1. The Financial Blogger
I guess that sometimes, it would be better (and more profitable) to sell the company so you can leave money to your family member once you pass away.
Even huge companies have the same problem. Just look at what is going on with Quebecor and Quebecor World…
Apr 1st, 2008 @ 8:02 am
2. FrugalTrader
FB, that’s exactly what the author recommends. Have a proper exit strategy for the company before children get involved. Have a plan to sell the company to reap maximum profit and pass the cash on later if you wish.
Apr 1st, 2008 @ 9:44 am
3. Dividends4Life
Based on the title it is not a book i would normally pick up. Reading your review it does sound interesting.
Best Wishes,
D4L
Apr 1st, 2008 @ 11:20 am
4. FrugalTrader
I had the same impression. It doesn’t have the “sex appeal” of rich dad or other big names, but I highly recommend family business owners to read this.
Apr 1st, 2008 @ 11:26 am
5. Dividend growth investor
This does sound like an interesting book. When I become richer, the lessons from it would far exceed the books price.
Apr 1st, 2008 @ 11:43 am
6. Nate
Interesting book. Facing some family business issues at the moment on both my side and my wives.
Apr 1st, 2008 @ 11:47 am
7. MikeG
It makes sense that business succession is so hard, If I love computers and start a company based on computers and want to pass it along in my family, I need to have a child(family member) who likes computing roughly as much as I did. A long time ago when we had like 6 kids (or more!) there was probably a decent chance that at least one of our children would be interested. Now we have like 1.5 kids so its less likely that our child will even be interested in the family business, let alone apt for the business.
-MikeG
Apr 1st, 2008 @ 12:57 pm
8. Nicolas
“Could family business succession be that poorly handled?”
I agree with MikeG, kids just might not want to do the same as mom and dad.
Nevertheless, it’s true that a business transfert is always a delicate issue which needs a lot of planning.
Apr 1st, 2008 @ 4:35 pm
9. DAvid
Another challenge can be that the business has grown to the point where only a larger corporation can afford to effect a purchase. IF there are a number of siblings, there may be a need (or moral obligation) for the transferee to buy out the other sibs, or the parents. If the value of the business is too great, the capital may not be available to effect a transfer in this manner. Thus, the business may be better to be sold, and the profits distributed.
DAvid
Apr 1st, 2008 @ 10:57 pm
11. Brad T
My parents are literally in the process of selling their farm. They are both retired with teacher’s pensions, and neither my sister or I have the aptitude and/or desire to take over. They are taking the money and buying some true liability objects (like trucks and cars), but the majority of the money has gone to purchase a year-round cottage on a lake in Ontario. My sister lives nearby but I live out-of-province. So in terms of business succession, the profit is being taken out, however any “transfer of wealth” built up in the business will occur when they pass on.
In the comments here it is mentioned that the author recommends “Have a plan to sell the company to reap maximum profit and pass the cash on later if you wish.” Does he touch on wills/estate planning?
Apr 3rd, 2008 @ 5:34 pm
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