Succession Planning and Businesses Intangible Assets…

Michael D. Moberly, Principal, Founder kpstrat and ‘Business Intangible Asset Blog

Several years ago, Alexia Elejalde-Ruiz (Chicago Tribune) wrote ‘The Boss Is Retiring, The Kids Don’t Want To Take Over, A Succession Crisis’ which describes challenges confronting family owned – privately held businesses in the U.S.

Elegalde-Ruiz’ piece presented several examples of businesses’ experiencing, for various reasons, succession challenges. One example was a third-generation owner of a machine tool sales and service company.  The preference of the grandfather – founder of the current owner and CEO, was to keep the company in the family. However, other (younger) family members conveyed little or no interest in doing so.

This is representative of thousands of privately held family SME’s, i.e., (small, medium enterprises) in the U.S., often started – operated over generations. Now a not, insignificant percentage of which, are (a.) being variously influenced by ‘present day uncertainties’ and (b.) expressing concerns – frustrations regarding…

  • what will – could – may happen to their business if a familial-rooted succession plan does not materialize as a preference.

In many instances, an option to ‘family succession’ is to seek parties’ whose interests include exploring merger – acquisition possibilities. Effectively, these options, if pursued and accepted, will conclude a family-owned – operated business. When that is a collective preference, all can be good.

However, in many instances, its’ important that parties recognize, particular business things intangible, which a ‘generational’ business has likely developed and applied proprietarily, are unfortunately,

  • conventionally characterized, minimized, overlooked, or dismissed as either not being transferable, un-valuable, un-sustainable, ‘life-spannable’, or un-attractive to other businesses or prospective buyers.

Respectfully, as an intangible asset strategist and risk mitigator…and because the experientially – rooted perspectives and guidance offered @ ‘Business Intangible Asset Blog’ include…

  • arrays of viable and lucrative options – rationales for utilizing – benefitting from a business’s proprietarily developed – applied intangible assets, which all business owners, especially family held businesses, should assume an obligation to consider as a ‘potential path’ to perpetuate – pass along what a family originated business has developed.

Otherwise, the (legal – accounting) processes required for dissolving privately held – family-owned businesses, may – could materialize as a ‘reality TV show food fight’.

The vulnerability – probability of that, elevates when parties – players are dismissive of, do not recognize, and/or under-value the various collaborating and interacting (intangible) components which underlie – directly contribute to the business’s generational operability, valuation, and sustainability, i.e.,

  • the intellectual, structural, and relationship capital which has been developed, cultivated, and embedded in its operating culture, which routinely – authentically comprise 70+% of most business’s valuation and sources of revenue.

Absent receptivity to considering (recognizing) the contributory roles, value-adds, competitiveness, sustainability, and transferability of particular-intangible assets held by a business…

  • they are likely to be unceremoniously abandoned or relinquished to and applied by competitors for their benefit without valuation or compensation to the assets’ originator.

So, whether whole or in part, it’s conceivable that collections – collaborations of (proprietary) business things intangible may – could – can present and constitute…

  • attractive, applicable, negotiable, transferrable, competitive, and sustainable contributions and value-adds to various other businesses – prospective buyers, if they are recognized.

Readers of ‘Business Intangible Asset Blog’ are encouraged to review other posts wherein arrays of issues related to business things intangible are experientially researched and authentically and practically expressed.


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