Many of the world’s most notable brands began as family enterprises. From Hermes to Walmart, families have often been the backbone of companies that have stood the test of time.
Studies have shown about 35 percent of Fortune 500 companies are family-controlled, and family firms represent the full spectrum of American companies from small businesses to major corporations. In fact, as much as 80 percent of new job creation in North America comes from family businesses.
Long-term family succession is not a sure thing, though, with only 30 percent of all family-owned businesses surviving into the second generation, 12 percent into the third generation, and just 3 percent operating into the fourth-generation and beyond. Instead, many families choose the alternative of selling the family firm or simply winding down the operation.
Real estate has long been a business populated by legendary family brands. The two oldest brokerages in the U.S.—both of whom have remained independent—are affiliated with our network, Leading Real Estate Companies of the World® (LeadingRE). Both Baird & Warner in Chicago and N.P. Dodge in Omaha have celebrated anniversaries exceeding 160 years and are still run by the same families.
Nowadays, with so many real estate principals being baby boomers, there is a critical need for companies to either be much more deliberate about succession planning or resign themselves to selling the company or folding into another brokerage as their exit strategy.
Because LeadingRE wants to preserve the legacy of its market-leading members that are family-owned companies, we hosted our first-ever Family Succession Workshop October 13-14 in Chicago, specifically for both generations of member firms that are in some stage of business transition.
As a learning organization, we’ve seen a real benefit when managers get together to strategize, problem-solve, and learn from those who have overcome challenges in other areas, which is why we decided to host an in-person event on this important topic. In this case, though, we have reached outside of real estate to learn from seasoned advisors to family businesses in every industry.
Business transition, governance, leadership and ownership issues, especially in family-led brokerages, are challenging because they encompass both emotional and financial components for those charged with running the company as well as other family stakeholders. We felt it was important to develop a program that includes advice from family business consulting, tax and legal, estate planning and valuation experts to help families navigate these potential landmines. We also featured brokers who have been through the process in one or more generational transitions to share their experiences and advice.
LeadingRE’s Family Succession Workshop was led by leadership coach and former clinical psychologist Mike Staver of The Staver Group and featured a variety of noted family business speakers, including Drew Mendoza, managing principal of Family Business Consulting Group and a global leader in the field of family business succession; Judy Hogel, executive director of the Chicago Family Business Council at DePaul University; family business communication expert Anne Kincade; attorney Jonathan Michael; CPA Deanna Salo; valuation expert Scott Wright of REAL Trends; and family business principals Stuart Elsea of Real Estate One, Pat Riley of Allen Tate Companies, and Dan Fazendin of Fazendin Realtors.
Even if—as in the case of Allen Tate—the family chooses to tap a non-family member to lead the company and be a minority shareholder, there are always paths to extending the life of family businesses with proper preparation and planning. Our goal with this program is to ensure that we have many more Baird & Warners and N.P. Dodges in the years to come. After all, nearly every private company owner is also a member of a family.
This unique LeadingRE workshop is designed to provide a framework for initiating the challenging conversations that will launch the important work of extending family business legacies for generations to come.
For more information on LeadingRE and its member programs, visit LeadingRE.com/aboutus/membershipinformation.
