It may seem morbid that reports of Paul Newman’s ill-health
have prompted speculation
about the future of his multi-million dollar food production group, Newman’s
Yet, while one obviously prays that the actor and entrepreneur
will recover to remain with us for many years, it is no bad thing to be forced
to think in advance about the difficult issue of corporate succession.
Many successful businesses do not survive the passing or
retirement of the entrepreneur who founded them. While this might be a tribute
to his enterprise and energy, the fact that he allowed his organisation to
remain too dependent on him as an individual is not a tribute to his management
Where an otherwise strong business does not survive a change
of generation, one or more of three factors is usually involved.
First, inheritance laws or estate taxes are often insane:
they may effectively force the break up and sale of some of the most reliable
employers and net contributors to the economy in their jurisdictions.
Second, the heirs of the entrepreneur may be unwilling or
unable to assume the burdens of managing a complex business. The weak,
inadequate son of a strong, self-made man is a literary cliché, but one which
has many precedents in real business life.
Third, the entrepreneur may have failed to bring in a
professional management team from outside and hand over to them in order to
make the company truly autonomous and able to stand on its own two feet. Many
entrepreneurs have a psychological block when it comes to handing over power in
this way, but it is essential if both the entrepreneur and the enterprise are
to move on and reach their full potential.