Successful transitions of ownership and leadership are one of the most difficult tasks in any family business. 

One of the significant interested parties in these transitions is the company’s bank.  The banker is in a very unique position and generally sees a lot of risk in most transitions – especially ones that are not planned well in advance.  Often, the bank is comfortable with the G1 family member and there is a trust-based relationship that has been established over a number of years.  Most bankers are very concerned when that person exits, especially if they are not familiar with the talent level of G2 and if they don’t have an equally comfortable relationship with G2.

Many G2 development plans include comprehensive training and development.  As part of these plans, it is also a good idea to include the future G2 leader in various corporate-level activities such as banking meetings so that they understand the issues and, more importantly, they get to know your banker. 

Having the bank on board with your transition plans is critical, as they are the source of the company’s capital and an important business partner of most private companies.  They will see a lot less risk in a family transfer if they already know the G2 family member and have an established relationship with them at the time of transfer.

How do you manage the relationship with your banker to ensure all the appropriate family members are involved?  Share in the comments.