Ep. 53 — Wayne Rivers: Why the Next Generation Has to Be Willing to Walk Away

4 min read

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Episode Summary

You’re the next generation. You worked harder than anyone else to earn your stripes, and dad has gradually delegated operations, sales, and service. The one thing he won’t let go of is the money. The plans your CPA wrote never got implemented because somebody at the top didn’t want to change. Wayne Rivers has been watching this exact movie for 28 years at the Family Business Institute, and the stats are brutal: 70% of family businesses don’t survive G1 to G2, and only 4% make it to G4. We got into why complacency kills the most successful companies (the ones printing money today are usually the ones already dying), why half the surviving century-old family businesses got out of their legacy business, the one trump card the next generation actually holds (and why most won’t play it), bridge management as the 50-year-old buffer between dad and you, and why the tax tail is wagging dogs that don’t even owe a nickel. I sat in this seat in our copier business. This conversation is the one I wish I’d had ten years earlier.

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## Top 10 Takeaways
  1. The succession stats are real. 70% of family businesses don’t survive G1 to G2, and only 4% make it to G4.
  2. Complacency seeds the destruction. The businesses printing millions today are often the ones already dying.
  3. Reinvent the business every few years and keep attracting the best people. One without the other fails.
  4. Half the surviving century-old family businesses got out of their legacy business. The other half clung and died.
  5. The founder usually delegates operations, sales, and service. The one thing they never delegate is the money.
  6. Your only card as the next generation is the willingness to put your keys on dad’s desk and walk away.
  7. You cannot reason with an unreasonable person. You cannot change someone who doesn’t want to change.
  8. Bridge management is the 50-year-old you hire between dad and next-gen to absorb friction and groom the successor.
  9. Model the finances before you hire the executive. Most family businesses can’t forecast at all.
  10. Non-voting shares solve the ownership-versus-control problem. Stop letting the tax tail wag the dog.

Sound Bites

“He said the only card I can play, and this is a trump card, the only card I can play is I can put my keys on the table on my dad’s desk and I can say okay, you want to control it, go ahead, it’s all yours.” (@TBD) — Wayne Rivers

“You cannot help someone who doesn’t want help. You cannot change someone who doesn’t want to change. You cannot reason with an unreasonable person.” (@TBD) — Wayne Rivers

“It’s schizophrenic, isn’t it? On the one hand you’re trying to make all the money you can. On the other hand you’re trying to minimize all that money so you don’t have to pay tax.” (@TBD) — Ryan Tansom

“Good people just make all your dreams come true, and bad people create their own set of nightmares.” (@TBD) — Wayne Rivers

About This Episode

Wayne Rivers founded the Family Business Institute 28 years ago after a career in banking and financial planning, where he watched roughly half the elaborate plans his clients paid for go unimplemented. The reason was almost always family conflict, not financial design. His firm now specializes in succession planning, mostly with sibling teams transitioning to G3 and G4. Wayne writes a weekly blog and pulls no punches on complacency, control, and the brutal statistics that govern multi-generational ownership.

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