Restructuring the family firm at succession: Aligning structure, motivations, and beliefs

As they reach the point of succession, owners of family firms face difficult choices, including a confusing array of options for restructuring their firms in preparation for a full or partial exit. This complexity can lead owners to make restructuring decisions they may come to regret. Drawing from research on the motivations of family business owners and insights from corporate finance scholarship on ownership of family firms, we generate a framework for guiding those decisions. First, we map the many restructuring options available to exiting owners along three overarching dimensions of family involvement in ownership: (1) financial ownership, (2) board-level control, and (3) management involvement. Then, we posit how three different motivations—financial wealth, socioemotional wealth, and prosocial goals—can and should influence restructuring choices along those three dimensions. Finally, we show how these choices are moderated by owners’ beliefs about the business and about its key stakeholders. For both researchers and business owners, this framework offers a way to compare different potential corporate restructuring choices given owners’ multiple motivations at the point of transition.