Newspaper article THE JOURNAL RECORD

Whose Job Is It to Take the Lead in Family Business Succession Planning?

Newspaper article THE JOURNAL RECORD

Whose Job Is It to Take the Lead in Family Business Succession Planning?

Article excerpt

Succession planning is one of the most crucial activities that any family-owned company undertakes.

Of course, there are several crunch points in a family company's life. Start-up is a dicey time for any business, and a vast majority of those that are launched hit the pad again nose-first not too much later. Then there's the growth leap, the point when the business expands beyond the family-style organization, management systems and controls of its early years. If the business can't adjust to the demands of increased volume and complexity, it can fold under the weight of its own success.

Another major crunch point is the period when decisions about continuity under family ownership and management are made. It's hard to overstate the importance of planning and executing the actions that ensure that continuity.

Succession planning is the key to maintaining the family's ownership of the business with minimal tax exposure and risk to the firm's stability. It's the key to a smooth transfer of management authority and responsibility from one generation to the next. And succession planning is the key to a comfortable and rewarding retirement for the senior owners who have spent their working lives building their family's financial security.

So with all that's at stake, who's responsible for focusing the family's attention on succession issues, setting up the schedule and mobilizing resources, securing professional help when it's needed, and guiding the process to a successful conclusion? The senior owner? The rising successor, or successors? Other concerned members of the family? Loyal longtime employees who know that successful succession is necessary for the company's ongoing health?

The answer is all of the above. If the business is larger than a classic mom `n pop, activating and following through with succession planning involves all the major actors in one way or another, at one time or another. It's especially important that key family members see eye to eye on several key points right up front. The senior owners, the rising generation and other family members who hold stock, or hold a stake (not always the same thing), in the company must agree on the following:

* The family wants to retain ownership of the business after the founding, or current senior, owners step down from executive leadership.

* The business is stable and profitable enough and its future in the marketplace is bright enough to justify keeping family ownership into the next generation.

* The rising generation includes people with the basic qualifications and commitment to run the company successfully.

* All key family members are ready to undertake a systematic process of analytical assessment, planning and transfer that may take years to complete and call for some very tough choices.

* The senior owners are prepared to manage in a business-like fashion a succession planning and transition process that will ultimately result in their handing over leadership and letting go of decision-making authority. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed


An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.