The following information is quoted directly from www.lcms.org/faqs/denominations.
What are the theological differences between Lutheran churches and Episcopal churches?
While there are a number of significant theological differences between the LCMS and the Episcopal Church (e.g., the issue of authority in the church, especially as it relates to the doctrine of Scripture as the inspired and inerrant Word of God; the nature of the sacraments as means of grace; the precise understanding of the doctrine of justification; the question of what it means to be a "confessional" church), perhaps the most obvious difference has to do with the Episcopalian view of apostolic succession (which pertains equally to more "conservative" offshoots from the Episcopal church). This difference is summarized as follows in Lewis Spitz's booklet "Our Church and Others":
Episcopalians attach great important to the theory of the apostolic succession. They insist that the apostles ordained bishops, these in turn ordained their successors, and so down through the centuries, so that the present-day bishops are the successors of the apostles through an unbroken chain. Scripture knows nothing of such a theory. Episcopalians hold that only bishops who have received their authority in this way can properly ordain ministers and that without such Episcopal ordination a minister cannot validly perform the sacraments.
For more information about denominational differences, you may read Churches in America by Thomas Manteufel, available from Concordia Publishing House (800-325-3040).