Abstract
Family-controlled businesses are the prevailing form of enterprise throughout the world, making significant contributions to their respective economies. World-wide, an unprecedented number of family businesses are facing ownership and management succession. A critical aspect of succession is finding capital to finance transition. This research addresses the issue of transition financing by reporting the combined results of two surveys, one to venture capitalists and the second to owners of family businesses. The findings clearly suggest that the financing of intergenerational transfers is a significant issue to owners of family-owned firms. Also, we observed that venture capitalists are interested in participating in transition financing, usually in the form of debt or preferred stock combined with sweeteners (warrants or conversion rights). In their evaluation of transition investments, they are particularly interested in the qualifications of the successor, along with the firm's strategic plans.
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