In the world of financial planning, there are few events quite as disruptive as the death of a business owner and shareholder of a closely-held corporation.
The plan to hand over the leadership of a firm from its founder to his/her successor is often something that is not top-of-mind, but to have a well-prepared process in place long before the possibility of succession exists is not only smart, it is vital to the company’s future existence.
The single greatest threat to the survival of family firms is poor succession planning.
The lack of a clearly defined succession plan has often resulted in family disputes that overflow into the business. Problems usually arise as a consequence of the business owner’s desire to be fair to all family members. It is an all too common dilemma that more often than not, results in the firm’s liquidation.
It is our responsibility as trusted financial advisors to encourage our client, the business owner, to commit time and effort toward ensuring that family influence does not supersede business logic when making decisions about the succession plan for their company. But in making those decisions, we must also be conscious that the owner’s family will not need to spend a lifetime dealing with problems and consequences that will result from the owner taking no action at all.
All too suddenly, the future becomes the present, and it’s too late to do what should have been done to make certain that the business survives the owner. Today, I challenge you to educate your clients on the importance of succession planning and provide them with the tools they need to successfully “pass the torch” – leaving the business they built with confidence and knowing that their legacy will live on because they took the time to properly prepare for the future.
