In family businesses, a departure from tradition is emerging. Family business owners are no longer automatically bequeathing the legacy to their children anymore. Nowadays, the next generation isn't exactly clamoring to inherit the family business. Mike McCarron, a founding partner of MSM Transportation, witnessed this transformation in the trucking industry, particularly in the wake of MSM’s acquisition by Wheels Group. Mike started Left Lane Associates, which today is North America’s leading supply chain M&A [mergers and acquisitions] Advisors. In an industry characterized by fragmentation and a myriad of family-owned businesses, a subtle but profound change is unfolding.

"The next generation," McCarron notes, "is opting for university education and the prospect of jobs with predictable revenues and hours. Having observed the arduous journey undertaken by their parents, the torch isn't as eagerly grasped. Moreover, the landscape is evolving with more financially liquid options, making M&A an enticing prospect. The huge jump in land valuations over the past decade offers a far more lucrative exit, than passing along the business to the kids.”

In the dynamic world of transportation, McCarron says, “There is an emerging gig economy, where South Asians want to own their own business and bring their own truck, rather than be an employee. It is an increasingly fragmented industry.”

But the road ahead for the next generation isn't paved with tire tracks; it's marked by new opportunities. M&As are now the cool kids on the block, along with cash for the business real estate, offering new financial options.

Shift #1: From Stress to Predictable

Stress? The last five years have strained many family businesses, waking them at 4 a.m. with worries of payroll and responsibilities. Business owners are hesitant to pass this pressure onto their offspring, who, in turn, are wary of the heightened level of accountability. Guess what? The next gen has clocked in, and the grind seen by their elders is viewed not as a rite of passage but as a cautionary tale. They've seen the movie, and they want a different plot.

Shift #2: Education as the Catalyst for Change

The conventional approach of handing over the keys to the next generation is no longer the only song on the playlist. Family business owners are embracing a new paradigm, investing time to understand succession best practices, particularly where next gens are required to complete business education. The family business next gens are figuring out that their lives are not about just coasting; they're discovering the value of education and learning about their own definition of purposeful work, not what is handed to them.

Shift #3: Renting Succession Expertise

Sophisticated sales processes for businesses are no longer the secret sauce of corporate giants. Family businesses are tapping into advisors, shattering the myth that only the big players get a seat at this table. With this opening up of M&A opportunities for more family businesses, a departure from succession tradition is emerging—family business owners are no longer automatically bequeathing the legacy to the next generation. The allure of a significant cash return on years of toil is reshaping succession plans.

Shift #4: Next Generation's Desire for Autonomy

The next gen wants out, not because they lack ambition, but because the game has changed. Daunting sale prices for the family business and the labyrinth of raising financing aren't their chosen battles. The next generation are attracted to the cleaner option of full sale of the family business. The significant pay-out, which will become their inheritance, is predictable. Why risk taking over the business built by their granddad, but which they may not fit? The pursuit of personal career choices is prioritized over familial obligations.

Shift #5: Impact on the Organization

Automatic succession of family members is not always well received. There is heightened awareness among family business shareholders regarding the impact of familial transitions on employees, and this is reshaping succession plans. Professional search firms are getting favored over automatic family member hires.

Shift #6: Cash is King - Predictable and Unquestionable

Family businesses founders are discovering that a wider range of buyers enhances the likelihood of fair value and a cash deal which are the crown jewels of succession. Cash in the hand is secure. This contrasts with relying on the family business managed by the next generation, with a more uncertain retirement income stream.

Shift #7: Harmony Amidst the Price Tug-of-War

A generational tug-of-war ensues—aging boomers pulling for max value, and the next gen tugging for a budget-friendly deal. Finding the sweet spot is not just a financial pursuit; it's a delicate dance to preserve family ties. Mike says, “Snow plow parents are hesitant to anoint one child the leader at the expense of their relationships with the other children. Easier to sell, distribute the wealth and let them do their own thing.”

As Mike McCarron observes, these seven shifts signify not the abandonment of legacy but a strategic recalibration. The M&A sale option is understandable as it removes the fighting and the uncertainty from the gig economy.

Adaptation to the evolving contours of succession is the hallmark of resilience, ensuring that family businesses transcend generations without sacrificing financial acumen or familial harmony. The next gen, well, they're not just the future; they're the architects of it, and they are driving their own lives, which may or may not include the family business.