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A family succession is different from all other exit options in so far as the emphasis is often not on maximising the owner’s exit price, but rather on ensuring that the business continues successfully under the ownership of the successor. Consequently, the tailoring (or grooming) is concentrated on the successor, rather than on the business. This alters the perspective of the business’s suitability for the exit option chosen and the notion of what purchasers are looking for. This will become clearer from what follows below.

Generally speaking, most types of businesses qualify for a family succession. However, if the successor is required to borrow money against the business’s assets to acquire the business, the business will need to be able to support the borrowings and the successor will need to have a professionally produced business plan demonstrating this ability.

As I have said, the emphasis in family successions is usually more on the suitability of the heir than the suitability of the business, so this question has to be changed to: ‘What are we looking for in the successor?’ This will influence the choice of successor and the way he or she should be groomed for the take over.

We will now look at the steps necessary for grooming (or tailoring) the heir for taking over the business.

Today, many organizations disappear from the list of successful business organizations on the popular ranking of some professional bodies (Agrawal, 2006). One of the factors generally reported as its root cause is the failure to manage innovation within the system. A critical psychological analysis of the attitude (statements as refl ected on interviews to
the media or the address of the Annual General Meeting) and behaviour of the respected business leaders and CEOs (as actually perceived by the group within or insiders, who really know the person well) reveals a wide discrepancy. It cannot be objectively established but inferences could be drawn that probably Indian business leaders and successful entrepreneurs possess a common style of managing people. At some stage in every level it is the personal relationship that matters in the fi nal decisionmaking.

This is based on the perceptual response analysis of those who aspire to get a chance to lead the organization. In case my thesis gets empirical support and validity, then the absence of entrepreneurial leadership in India requires further empirical examination. Thus, this leads only to routine success and normal achievement, which could be relatively better in that business environment. Any global business/ entrepreneurial leader of this century has to go beyond personalized relationships and feelings of insecurity (loss/absence of power) in order to compete and keep going. Therefore, societies, where leaders say something and do just the opposite, will have diffi culties in fostering and developing an entrepreneurial existence. The role of the top management in an organization is crucial in making an entrepreneurial initiative, a reality and the process effective. Here, a CEO has to go miles away from the transformational leadership if he/she is willing to take the organization ahead.

The traditional fundamental approach and structural models generally are based on the same set of balance sheet inputs. But while the fundamental approach used by most credit analysts requires thorough company and industry knowledge and is therefore rather costly and time-consuming, equity-based models are an efficient means to screen broad universes of credit issuers. However, structural models allow to incorporate credit analysts’ forecasts to take account of qualitative information that is not yet reflected in the balance sheet. Projections can be used to create more realistic estimates of the default threshold or to generate different scenarios with respect to future liabilities.

Herd psychosis is a mass form of people pleasing. Members of the herd all conform to the seeming will of the herd, regardless of their individual self-interest. As the herd bids up prices, the chosen asset class soars in value. This draws more members into the herd and prices move beyond any measure of reasonable value. The size of the herd increases exponentially.

Suddenly the herd sentiment switches to sell and then to panic. The vast majority of herd members come in late and suffer huge losses. The total capitalization of an investment class determines its potential for herding. Large investment classes such as stocks and real estate have seen tremendous bubbles. Tax lien certificates, stamps, and other small asset classes have little herd potential.

Herd psychosis is not just the potential to be fashionable or trendy. All investments have periods of popularity. Oil and gas limited partnerships were hot from 1975–1984. However, they did not produce the herd instinct. The herd instinct is a feeling that you must invest in this asset class regardless of your economic circumstances or the prospects for the asset class. Although oil and gas limited partnerships were once very popular, few, if any, investors who could not afford the losses actually purchased interests.

Irrational buying is not limited to people pleasing. Some investments are purchased on a mere impulse. No one is pleased, including the purchaser. An impulse is satisfied and that is all.

Before online trading, there were few investments that could trigger impulse buying. Today, any investment that can be bought and sold on the Internet is subject to impulse buying. Stocks and mutual funds are the most common impulse buys. Real estate requires weeks, if not months, and large cash outlays. Impulse buying is nearly impossible with real estate. A pattern of impulse buying is a sign of self-destructive behavior. If you have made one or two impulse buys, look for investments in that cannot be purchased online. If you can count more than 10 times when you have bought investments on impulse, you need additional help. Call a therapist.

Investing triggers all our character flaws. People pleasers have trouble with many investment scenarios. People pleasing is conforming to another person’s will at the expense of our own self-interest. We feel if we say no to their requests, they will not like us or will not respect us as investors.

Profits are made in the sale of all investment products. Someone is always interested in getting you to buy. Stockbrokers want commissions, no-load mutual funds want expenses, banks want interest rate spreads on CDs, Realtors want commissions. A people pleaser often buys investment products to make someone else happy and later finds himself miserable.

People other than salespeople can trigger people pleasing. Many people use their parents’ broker to make their parents happy even if the broker turns out to be a stock churner. Even on discovering the truth, they continue to use the broker so their parents will not find out the broker is a crook and be alarmed. Employees commonly buy employer stock to please the boss even if the stock is a poor investment or renders their portfolio undiversified.

During the tech bubble, many tech stocks were purchased to show other tech maniacs that you were part of the group.