The next succession: Keeping a family business intact in the third generation

Any succession in a family business can be difficult. But in my experience — and literature on the subject supports what I’ve observed — the transition between the second and third generation of a family business is by far the most difficult. While there are numerous studies citing various percentages of family business survival over generations, most if not all agree that as time goes on, the transition becomes more difficult, and many family businesses sell or fail. 

But why?

There are a variety of reasons that family businesses struggle to make it to the third generation. Some of them are unique to the family business in question. But there are some themes that I’ve witnessed over the years. My observations generally apply to the Greatest Generation-Baby Boomer-Gen X time frame, but these observations could be applied to any timeline.