Family business – any succession plan in place?

Posted: October 1, 2013 in Family Businesses

Large publicly traded companies announce top executive changes months in advance.  A large bank may announce that their CEO is leaving in 9 months and a search committee has been formed already to find a successor.

Large companies have a roster of qualified candidates for top management positions but care is always taken.  This isn’t the case in a small business or a family business. In many cases the replacement is known. It’s a matter of when the change will occur.

What sort of business environment will the successor inherit? If the current shareholder will pass the torch to his/her successor, what is being inherited? In too many instances, the inherited problems could be as great or greater than before the transition.  The business environment today is much tougher than it was when your parent moved into the front office. A strategy of “more of the same” could spell the end of the family business.

It is incumbent on the family owner/managers to have a business planning process in place. What is the state of the business now and what challenges will the new owner face? The business should be dropping one (executive) salary but will the business really be better off.

A change in control without a succession plan is a recipe for disaster.

I will talk about a succession plan in the next couple of posts.

 

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