The sudden death of the CEO-owner increases a medium sized enterprise’s (SME) vulnerability to bankruptcy. That’s what a recent study published in the Journal of Management Studies claims. It’s a scary statistic for any family enterprise. And it’s also a good reminder to update your crisis succession plan.
But, when crisis strikes, who should take over?
In the short-term, SMEs with a family successor tend to struggle with greater financial strain. Grief and emotional ties hinder their strategic decision-making, when compared to nonfamily successors.
However, SMEs with a family successor often overcome these struggles. They’re more resilient. Drawing on legacy and familial ties, these successors outperform nonfamily counterparts in the long term.
A successor’s familial role is only one factor to consider when choosing a successor. Another factor is their embeddedness in the enterprise. Learn more about embeddedness—and how it affects successors—in “Who Should Take Over When the CEO-Owner of a Business Suddenly Dies.”
Read about choosing a successor in an unexpected crisis here.
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