Management succession can be a significant challenge for many business owners, but because it is often neglected until a crisis erupts, succession decisions are often forced, and the results are less than optimal for all parties involved. Owners who fail to deal with this issue in a forthright and timely manner can upset the harmony of long-standing family and business relationships.
Some owners fail to address the issue because the are so immersed in operating the business that they neglect even such a vital question as who will take over in the event of disability, retirement, or death. Sometimes owners assume that a child or other relative, or even one or more key employees, will step right in, even if they have never discussed this possibility with the individuals concerned.
In planning for succession, some owners may need to consider the interests of key employees who, though not family members, have contributed to the success of the business and may have an expectation of a managerial or ownership role. Other owners may choose a successor but overlook the training needed for him or her to operate the business effectively. To identify the optimum solution, owners such as these often require the assistance of objective practitioners who may have prior knowledge of the operations, family dynamics and personnel involved and can also bring professional and objective insights to the table.
Seigneur Gustafson has been involved for decades advising owners and managers of closely held businesses in the development and implementation of well-conceived succession plans. These plans are often driven by the following circumstances:
- An owner plans to retire but has no identified successor.
- A designated successor is no longer interested or available.
- A designated successor needs further coaching and training to operate the business effectively.
- An owner’s retirement plans have changed, creating a need for a revised plan.
- A designated successor lacks the financial resources required by current owners to properly execute a succession plan.