Business Succession Planning - Part 2

The previous article on business succession planning described why such planning is important and that it is seldom accomplished without outside help. Besides tax, accounting and legal issues involved in any change of ownership, succession planning in a family or closely-held business also involves personal relationships that can both help and hinder the process.

In the minds of many current “senior” owners succession planning is seen as the first step towards retirement and their own morality. These emotions mixed with and often accurate assessment of the abilities of the younger generation results in procrastination, reluctance and even rejection of proposed changes.

In the case of the younger generation, or aspiring new owners, what needs to be said is often left unsaid because the communication between business partners is different than between parents and their children. Rather than expressing disagreement or constructive criticism, both generation, but especially the younger generation, may either remain silent or simply abandon the process.

While any type of business planning will benefit from the “team” approach, committed succession planning may need the added ingredient of family counseling. A few such firms exist and can often salvage a business succession plan that is in danger due to personal conflicts.

The older generation is entitled to keep what they earned, have certain financial security and a post-retirement role to plat if they want it. The younger generation is entitled to respect for their own abilities, a chance to succeed and the right to make a few mistakes. The older generation should remember that they probably made a few mistakes of their own.

In-laws are a “wild card” in every family situation. In-laws can be the best or worst influence and are often both the sounding board for silent frustration and force behind final confrontation. If mom and dad consider themselves a “team”, they should have no less respect for the support showed by a daughter-in-law or son-in-law. A family or a personal relationship that prompts business owners to pursue succession problem create its own set of obstacles. Like obstacles to any objective, they can cause defeat or be dealt with as something to be expected. In the next article we will cover how to spot and develop good successors.