So You Don't Want to Inherit Your Dad's Business

5 min. readbyVexxit StaffonJuly 15, 2020
Millennials are more frequently turning away from taking over their family businesses. What causes this hesitance to carry on a legacy, and what can the new generation do to maintain their family's wealth? Let's explore.

“Almost every country has a saying about the failure of a business to pass to the second or third generation,” claims Peter Kurzina, a senior lecturer at the MIT Sloan School of Management, in a recent Forbes column. “In the U.S., it’s: ‘Shirtsleeves to shirtsleeves in three generations.’ In Italy, they say, ‘From the stables to the stars and back to the stables.’ In China, it’s ‘Wealth never survives three generations,’ and in Mexico, it’s ‘Rich father, noble son, poor grandson.’”

So, as a second or third generation heir apparent to a family business, there is more than a little pressure. While previous generations have struggled to either make it work or awkwardly disentangle from family business obligations, it seems today’s millennials have greater confidence in saying thanks, but no thanks.

According to Sonny Iqbal at global management consulting firm Egon Zehnder, “More millennial family members are balking at the thought of joining the business or being developed for a future leadership role.” He considers three reasons for this reluctance. First – millennial values don’t jibe with the old-fashioned notions of inheriting a family business. Mr. Iqbal points out that meritocracy is important to this generation, who “want to try to establish their own identity—winning the respect that comes from independent achievement and rebelling against the constraints of a work environment where family dynamics may not allow them to succeed.”

Secondly – when the world is your oyster, why eat at home? “An elite college education has become accessible for many children of family business owners, where they sit alongside future surgeons, museum curators and tech entrepreneurs,” says Mr. Iqbal. “Family businesses must now compete against this smorgasbord of career possibilities.” Thirdly – Millennials have been blessed with broader education and global social networks that have given them a more critical and informed eye than generations before them – eyes that are trained to objectively assess even the family firm.

“They know if it is innovative and vibrant or coasting on legacy, or if its infrastructure is robust and scalable or waiting to collapse,” says Mr. Iqbal. ”And if change is necessary, they will not be swayed by mere promises—they must have conviction themselves that change is possible.”

So what is a family to do, when papa is hoping to pass on the reins to the family bolt-making business, but junior is not feeling the social value of being involved?

Perhaps the key is to keep doors – and lines of communication – open. Few business leaders could argue with the advantage of outside training and experience. If a potential heir can spend a few years gaining third-party experience outside the family business, this can only contribute to greater perspective – either leading him or her to embrace the opportunities to make a difference at their family firm, or gain more certainty that their calling is along a different path.

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