Succession Planning for Family Businesses
Only one out of three family-owned businesses successfully transitions into the second generation. 88% (almost nine out of ten) will fail to make it to the third.
Passing the baton of leadership from one generation to the next is an event that must at some point occur in the life cycle of every family-owned company whose owners wish to preserve family control of their business.
There is no more difficult and important decision that a family must take than to determine when, how, to whom, and under what conditions the ownership and management of their business should devolve to the next generation. Planning for this event is a process that should be done long before the actual transfer is due to take effect. Leaving it “for later” exposes your business—and your family—to unnecessary and potentially catastrophic risks, which may be impossible to manage or contain if you and your family are unprepared.
Succession Planning Is a Complex Process
The issues that must be addressed are diverse, sensitive, and interlocking. Their resolution requires a broad range of technical skills (including legal, financial, fiscal, organizational, interpersonal, and business) that can only be successfully integrated by a team of specialists trained to work together in a multidisciplinary environment.
Most importantly, successful succession planning requires dispassionate and sound guidance on how to balance and accommodate the often conflicting expectations, priorities, capabilities, and aspirations of the personalities involved. It must, in other words, deal with issues and relationships with which the owners themselves often find they are too closely and personally associated to have the objectivity, perspective, and clarity of vision that is required for the task.
How Our Consultants Can Help
The counsel and advice of experienced professionals who are alert to the sensitivities that the process entails can help ensure that management of the business will pass at the right time and in the right manner to those family members who are best qualified to preserve the business’s on-going prosperity and the values on which it was founded.
An experienced advisor can also help you identify potential sources of future shareholder disagreement resulting from the diverging interests and priorities of family members. With the support of his technical and legal team, he will suggest and design appropriate legal mechanisms and corporate structures that will serve to avoid or, should they arise, amicably resolve such disputes or sources of conflict.
On the more positive side, your advisor and his team can help ensure equitable, tax-efficient, and fair allocation of the family’s assets in a manner that will most effectively meet the future income, capital, and wealth-management requirements of all family members.
AS Network has the experience and multidisciplinary expertise to help you navigate the uncharted waters of succession planning for your business and your family.
We are conscious of the fact that in succession planning, more than in any other field of business consulting, there are no ready-made, pre-fabricated solutions. The circumstances of each business and of each family are unique. Each succession plan must be individually crafted to deal with the specifics of the family’s needs and capabilities and the requirements and expectations of its individual members.
We do not rely on standardized methodologies, generic succession planning templates, or predesigned road maps that aim to fit your family’s problem to some predetermined existing solution.
Together with the principal decision makers in your family, we will carefully and systematically review and analyze your needs and objectives. We will help you evaluate existing plans and ideas and outline a range of potential alternatives so as to give you a clear picture both of the possibilities and of the constraints of the strategic options available to you. And we will help you at every step of the process to design and implement the succession plan that most closely serves the unique needs of your business and the aspirations of your family.
This is a highly interactive, personalized approach. Its purpose is to ensure that all decision makers are fully appraised of and committed to the steps being taken before any legal, organizational or management changes are actually implemented. It also ensures that we will bring to the task the exact composition and caliber of technical and operational expertise (legal, organizational, fiscal, and other) required for the effective design and rollout of the succession plan.
We are confident that our approach will add significant value to your succession planning process. If you would like to learn more about our uniquely specialized service offering in this area, please visit www.asnetwork.gr. We will be happy to arrange a meeting with you to further analyze how AS Network can meet your needs.
Published in Business Partners magazine, issue of Nov-Dec 2017