Entrepreneurial succession, perpetuation, and philanthropy
The focus of this chapter is entrepreneurial succession, perpetuation, and philanthropy. We focus on the issue of succession because properly executed entrepreneurial succession can greatly affect the value of the entrepreneurial venture. Conversely, a poorly executed transition is likely to translate into a lack of success, underperformance or outright business failure. There is another important reason for considering succession, especially in the context of entrepreneurial firms – evidence confirms that about 50 percent of owners of family-based entrepreneurial firms are expected to transfer their ventures to the next generation in the next 5 to 10 years (in an additional 25 percent of these firms, further succession is expected in the next 10 to 15 years). The value of these successions is estimated to equal $20 trillion. Another important reason to concentrate on entrepreneurial succession is that research evidence suggests that in the majority of cases, the founder is not likely to find a suitable successor from within the family structure; therefore, an understanding of entrepreneurial transitions is critical. Entrepreneurial succession is important from the perspective of entrepreneurial firms, the local community, and the national economy.