What the Ford Family Reveals About Succession in the Business

Ford Motor Co. has led the automaker industry for well over 120 years, with a $185 billion valuation and a global workforce of nearly 170,000. One of America’s oldest and best-known car brands, its inventions have changed the transportation game, redefining what it means to live in a motor-centered era.

But as times shift, even a company with this kind of legacy is experiencing defeat when it comes to succession. After a successful career as executive chairman of Ford, Bill Ford recently announced he might be ready to take steps toward retirement soon.

If Bill Ford is stepping away, one important question lies: Who is next to lead the automotive company to victory?

It seems natural for Bill to transition the business to the next generation in line, knowing that Ford comes from a lineup of family heirs. Yet, for a long time, the Ford family has been sensitive to perceptions of privilege. Henry Ford II, grandson of the company’s founder, has said family members are only guaranteed rank through decision by the board.

For small to mid-sized businesses, Ford’s case is a prime example that many are facing today. When there’s uncertainty with succession, lower-scale entities risk consequences, if not more than the average company.

“When a company like Ford, with more than a century of history, billions in revenue, and a bench of professional managers, still faces public scrutiny over succession, it’s proof that no business is immune to leadership risk. For small and mid-sized family businesses, the margin for error is far slimmer, there’s often no deep bench, no corporate safety net, and no second chance if the transition goes wrong,” says Ankit Shrivastava, entrepreneur and founder of Enventure, a US-Indian private equity firm helping family businesses through generational planning.

Company giants like Ford prove that proper succession is more than the family. It’s about instilling a plan that maximizes the value so that the original founder’s vision can be seen through its entirety. Otherwise, small and medium-sized businesses might hit a breaking point.

Shrivastava continues, “Fewer than 30% of family businesses make it to the second generation, and less than 12% survive to the third. Waiting until you’re ready to walk away is far too late, succession planning must start when the business is healthy, not when it’s already at a crossroads.”

With rising succession issues across the U.S., family businesses can no longer afford to wait. This is where the right to private equity (PE) can make a broad impact, a concept defined as a form of investment that involves taking ownership of stakes in effort to strengthen operations of the business.

By adopting private equity, businesses have the potential to scale and grow through strategic partnerships and smart capital. When structured thoughtfully, PE can also:

• Bring in leadership: By recruiting experienced leaders like CFOs and COOs, this professional expertise can improve and clarify companies goals and structure.
• Narrow direction: Access to PE allows executives to make strategic decisions that can position the business in a positive direction.
• Preserve legacy: PE firms can help business founders through a gradual exit so that transitions remain seamless and legacy does not get lost in the mix.
• Access to network: Companies have the ability to tap into joint ventures and partners to further enhance operational efficiencies.

The succession battle is a rapidly challenging concept. But if it is embraced with confidence, small businesses too can outlast their legacy. And if it is anything like the Ford name, the future of the business will only move forward if it is approached with a thorough strategy—and one that looks past the bloodline itself.

If you are a small business owner hoping to step away soon, this is your wake up call to start investing in private equity. If not, you might find yourself at a tragic loss.

Because just like Bill sees continuity for the Ford brand, you should envision the same for your business, too.