As family businesses move from one generation to the next, relationships between various members sour due to family infighting for personal, financial or family survival.

Why is it that at the time when the business most needs the family’s solidarity during transition that the family makes things difficult for themselves by not planning for succession? Planning for succession is difficult and often procrastinated.

Every country is filled with stories of an entrepreneur’s success and in the next generation usually the business and family breaks. Ambani brothers illustrate the family infighting in India, wherein after seven months of feuding for control over India’s largest private sector conglomerate Reliance Industries, a $23 billion corporate empire, their mother, Kokilaben, brokered a deal leading to an amicable solution.

Under the division, elder sibling Mukesh Ambani, 48, keeps control of the oil, gas and petrochemicals businesses of group flagship Reliance Industries Ltd. and Indian Petrochemicals Corp. Younger brother Anil Ambani, 46, will get control of Reliance Energy, one of India’s biggest power utility firms; Reliance Infocomm, market leader in the country’s booming telecom sector; and Reliance Capital, the group’s finance arm.

The fight over Reliance Industries that has India’s biggest shareholder base and whose revenue accounts for 3.5 percent of the country’s GDP was closely watched. The resolution sent the Bombay Stock Exchange into a tizzy with the Sensex crossing the 7000 mark.

That infighting in family owned businesses is a global phenomenon is evident with the bitter infighting within the Chicago-based Pritzkers, who preside over an empire estimated at more than $15 billion, including the Hyatt Corp.
hotel chain, a string of industrial companies, and sprawling real-estate holdings. The senior members of the family were in the process of splitting up the assets, which prompted the dispute and lifted a veil on the secretive clan.

Liesel Pritzker, a 20-year-old actress, who as a child starred in the 1995 movie “A Little Princess,” and her brother, Matthew, 22, each now control fortunes of about $450 million after the final settlement on January 7, 2005 of a nasty legal dispute with the rest of their family.

What is the future for family businesses?According to the US based Family Firm Institute, two-thirds of family-run businesses never make it past the first generation. Only 12 percent of them hand over the reins to a third generation, while just three percent ever continue into the fourth generation and beyond.

One of the critical aspects of a strong and healthy continuation of a harmonious family and successful business is the ability to communicate and solve problems as a Family Team. Where family-run businesses perform excellently, they increasingly employ a large staff of professional, non-family managers.

Research has proved that external work experience away from the family business is important for the successors before they return to the family fold. Where there are a number of children to take over a family business, a clear-cut succession plan should be developed so there is no sibling rivalry.

Often, Indian families, sensitive to conflict, allocate a separate business to each child. In case these are co-owned but individually managed, they become a challenge to the smooth functioning of the work environment. Hence planning and communicating could hold the key to a promising future for businesses run by families.