Successfully transferring ownership to a family member is very difficult. Studies show that approximately only 30% of family owned businesses are successfully transferred to the second generation and only 15% to the third generation. When family succession planning is not handled carefully, ambulance business owners can create family division and even produce a competitor from within the family.
A successful ambulance succession plan begins with careful consideration. The following questions are designed to help family owned ambulance businesses begin to confront some of the issues that could influence a possible transfer of ownership to the next generation.
Is my family member genuinely interested in buying my business?
Don’t assume that your son or daughter’s dream is to take over your ambulance business. The increased pressure, commitment and responsibility are often not desired once fully understood by the next generation. Get the facts about where your family member stands long term with your ambulance business so you go about making plans that protect your financial interests.
Can I let go of the power and control over my business?
With the transfer of ownership comes the transfer of control and power. Be honest with yourself. If you can not relinquish complete control of the business you created to a family member, do not start down the path.
When will I be ready to sell? When will the next generation be ready to buy the business/assume control and responsibility?
There is often a disconnection between when an owner needs or wants to sell and when a family member is financially able or professionally ready to assume control of the business. Timing a transfer of ownership to a family member requires precision planning. Uncertainty in the economy or the need to reinvest in equipment can make business owners nervous if a clear succession plan with an implementation schedule is not in place. Likewise, family members can become frustrated with their ongoing contributions to developing the family business when a clear succession plan is not place. Don’t keep each other guessing about the future.
Do they possess the necessary skills to accept ownership responsibilities of an ambulance business?
It is not uncommon for business owners to face the dilemma of having a family member who desires to take over the family business but who does not yet maintain the necessary skills to successfully do so. This could be because of youth or because of a skill set and demeanor that is not quite suited for owning an ambulance business. Because the payout of a succession plan could hinge on the continued success of the business, owners have to be careful in this situation.
How will they purchase the business and how will I get my money out of the business?
The greatest challenge in succession planning is structuring a transaction that allows the business owner to keep the business in the family while pulling money for retirement out of the business. The vast majority of family members do not have significant funds to pay their parents for the business. If you are seventy years old, stretching a sale payout across 10-15 years is not viable option. Experience and deal structuring creativity can address this issue.
As mentioned, family succession planning is a very difficult and fragile process that involves an array of complex issues that extend far beyond the brief points in this article. Consult an industry professional early in the process to evaluate all of your strategic options regarding your family owned ambulance business.