Hartford Business Journal

18 HARTFORDBUSINESS.COM | MARCH 9, 2026 FOCUS | Family Business Michael Carter (right), founder and managing partner of Carter Morse & Goodrich, sits with Managing Director Christopher Reenock in the firm's Southport office. The firm advises family-owned businesses weighing succession and potential sales. Contributed Photo Succession Shift More family businesses consider selling rather than passing to next generation defense companies he advises are in a period of prosperity he hasn't seen in his 40-year career. "It's changed the succession planning discussion simply because people have more options because they're more profitable," he said. But he cautioned that selling in a hot market isn't simply about cashing in. "Is now a great time to sell your business? Well, do you enjoy running your company?" he said. "If you love running your company, it's a lousy time to sell your business because you're having fun." For those who are at the point of deciding whether to pass an asset on to the next generation, the calculation is much more complex. Counter to the wider statistics on family businesses, Alderman says he is seeing more younger generations coming back to run companies in the aerospace and defense sector. When that's the case, he says the best outcomes usually come in families where the children have had successful careers outside the business before they take over. "When they've earned independent officership of a large public company, then you invite them back, and they walk in the front door not as the owner's kid," he said. "If you just take your kid out of high school and put them in the business and hope it's going to work out, the statistics show it's unlikely to work." Do your homework Even in favorable markets, however, succession decisions can be constrained by the practical realities of running — and reinvesting in — a capi- tal-intensive operation. Staying compet- itive often requires reinvestment levels that families are unwilling or unable to By Harriet Jones hjones@hartfordbusiness.com F amily-owned businesses are a huge part of the U.S. economy, by some measures representing between $10 trillion and $14 trillion in economic activity. But a lot of data also suggests this mainstay of the economy is in the midst of a step change as an increasing number of family CEOs decide, rather than passing the reins to the next generation, they'll sell up and relinquish control. Estimates vary, but in at least one survey, among family firms expecting a transition within five years, only 41% plan to pass the business to the next generation, and fully 30% plan to sell to a third party. "That was a tough decision, but it was one that we all took very seriously," said Kevin Flanagan, the former vice president of Flanagan Industries, an aerospace supply chain company in Glastonbury. He, his siblings and his cousins sold control of the business to a competitor a decade ago after 70 years of family ownership. Founded in 1946 by his father and uncle in their mother's basement after returning from service in World War II, the machining company grew steadily over decades. By 2010, Flanagan Industries employed 150 people and generated about $18 million in revenue. Each founding brother had four chil- dren, and when the second generation took over in the 1980s, eight owners were working side by side. Several members of a third generation had also joined the business. "That made for interesting board meetings," Flanagan said, "but we still were able to grow the business." Ultimately, however, the family decided to seek an outside buyer rather than attempt another generational transition — a decision increasingly common as demographic realities reshape family enterprises. Demographic turning point Surveys show that about 78% of family companies expect to transition leadership in some form over the next decade, driven largely by aging baby boomer founders. The trend has also been building since the pandemic, when many owners postponed succession decisions amid economic uncertainty. "There's a wave," said Matthew Kerzner, founder of the North Haven- based New England Center for Family Business Excellence. Kerzner counsels businesses on succession planning and other stra- tegic needs and says he sees many companies that were on the brink of making a transition decision before COVID, only to hit the pause button. Lots of circumstances may prompt an outside sale — or even closure — rather than a generational handoff, according to Kerzner. For some smaller companies — like corner retail or restaurants — succes- sion was never necessarily the goal. "The children are being encouraged to use their brain, not their back," Kerzner says. "They're pushing their kids to be engineers, accountants, doctors, lawyers." In other cases, aging founders may doubt whether the next generation is ready to take over, or worry that forcing succession could fracture family relationships. "It's not worth ruining relationships from first generation to the second generation because they might not truly want it, or there's going to be conflict with the siblings," Kerzner said. By the time family businesses tran- sition to a third generation, a situation Kerzner calls the "cousins consortium," governance may simply become too diffuse and complicated to be viable. Hot market Beyond family dynamics, swings in an industry's fortunes can also greatly affect the succession planning process. Bill Alderman, founding partner of M&A advisory firm Alderman and Co., says the middle market aerospace and Bill Alderman Matthew Kerzner

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