Transition – Orienteering The Lands of Succession is one of my Active Knowledge guides and I believe a critical resource for the Entrepreneurs+ community.
The next 10 years represent an unprecedented era of risk and opportunity. By 2025 the Baby Boomers generation will be aged between 61 and 79 years of age. The value of the businesses that they control is in the trillions of dollars, represented in many instances by small and medium-sized business, and in others, by global brands and controlling interests in significant public companies. This sector is a powerhouse and the transition of management and control will set the fortunes for succeeding generations, write the history of the founders and may well impact economies around the world.
Want a current topical example? President Elect Donald Trump aged 70 years old and with a business group currently valued around $US3.7 billion has five children from three marriages aged from 38 to 10 years old. There are presently eight grandchildren from his two older children with the remaining three children likely to add to that count over the next 30 years. Some children work in the business and others are too young to be actively involved, but may likely want to be in the future.
I define transition, what some many call succession, as the compounding of wealth from generation to generation whilst ensuring family unity, individual growth and a sense of contribution.
Consider the care that the new President Elect must take in the planning for the transition of his business interests to the next generation so as to ensure that the wealth compounds in the hands of that next generation, is considered by all those involved (including the current and former wives) equitable, allows for contribution and growth at a personal level and underpins family unity. Not a simple or easy task. Even at the other end of the scale with a smaller business and family, the complexities of transition are real.
The most frequently given piece of advice that those who have journeyed down the path of succession give is: start early, start as early as you can and get professional advice.
Present estimates are that only 15 per cent of the Boomers have completed succession plans and in some countries the estimates go as low as nine per cent. You may now appreciate why this next 10 years represents an unprecedented era of risk and opportunity. Risk for those who assume they have time and are complacent; they may find that when they are ready that it is too late. Opportunity lies with those who plan and execute their transition early, they will win the rewards. It also lies with those who see this as an extraordinary window for growth and consolidation, they will pick the jewels from the exiting players in the marketplace and will build some extraordinary businesses for tomorrow.
In some countries the race is to sell the business and eventually pass over the wealth to the next generation in the form of investments. I feel this is a mistake. Businesses have a heart and a quality that may endure over many generations of a family and carry with them an ethic of hard work for reward. It is a message that will endure over generations whereas a ‘cashed up trust fund’ can carry a completely different message.
Yes, succession is about setting the character and values for the future generations of your family.
There are many challenges in transition and every business and family is different, but then again, businesses are businesses and families are families. The commonality of these challenges and their answers have become obvious to me over the years, and learning from the experiences of those that have proceeded you is worthwhile.
Transition – Orienteering The Lands of Succession is a topographical guide for orienteering succession detailing the five lands of transition, eight principles to guide and twelve dangers to avoid. It represents global best practices in business succession and provides a detailed roadmap to follow. If you are directly impacted by the succession of a business or are seeking to advise or support someone who is, then this guide is a ‘must have’ resource.
Active Knowledge Questions:
It’s time to choose, do you want to be the author of your business’s history and fortune, or will you leave it in the hands of fate?
What do you want your history to be?
And what will you do to bring it about?
You can buy Transition – Orienteering The Lands of Succession now. Or if you have a question of succession, send it to me via Ask Richard.
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All the best in the success of your business,
Richard Shrapnel
