Be Careful Who You Ask #succession

Richard Shrapnel's Orienteering Succession blog

In family business succession, often the family leader will ask peers, advisors, friends and family for their advice on how best to approach succession or a particular issue. This can have a disastrous impact on the intended outcome.

Active Knowledge Question:

Have you written a crystal-clear list of goals for what you are seeking to fulfil from your family business succession process?

 

Family business succession can be complex and, at times, messy as the emotions and wants of individual family members come to the surface. In addition, it can involve seeking a wide range of specialist advice for business strategy, leadership, governance, finance, estate planning, taxation, family dynamics and the various legal questions that may arise.

It is not unusual for a family leader, and family members, to seek opinions, both informally and formally, from a wide range of people. This input can be of great assistance in teasing out points to consider but also can quickly take the leader and family off track.

Let’s also keep in mind that family business succession is the most important capital transaction that you as a family leader will undertake in your lifetime. It will set your legacy and the future fortunes of the next generations of the family.

I’m sure all the advice and opinions you seek will be well intended but the risk is that they are simply not well informed or are looking at the question from only one perspective. In succession, this frequently occurs where taxation advice is sought independently of the goals of the succession process. In this instance, the outcome can be a saving of tax today and a significant loss of family wealth in the next generation.

The cornerstone goal of succession is ‘enabling the compounding of wealth from generation to generation while ensuring family unity, individual growth and a sense of contribution’.

The starting point of any family business succession process is the establishment of a tailored set of succinct goals sought to be achieved through the succession process of that family and their businesses. These goals are the summit you will be striving towards as you journey through the succession process.

Each piece of advice, each opinion, must be weighed against the achievement of these goals. In this manner, you will hopefully be able to put all the pieces of advice and opinions into perspective and keep yourself moving forward on the correct path.

I always recommend the retaining of an independent family business succession advisor whose sole role is to advise and guide you on the succession journey you are undertaking.

 


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All the best in the success of your business,

Richard Shrapnel