Succession is a process, not an event. To make a success of succession you should start early.
Multi-dimensional succession
In the owner-managed business succession is particularly complex because it is multi-dimensional, with key implications for ownership, management, people motivation, development, governance and finance. For the process to succeed the complexities should be acknowledged rather than ignored or over-simplified. Long-term success is more likely to be achieved if several options are identified and nurtured.
For the family business
Famously, or perhaps notoriously, family businesses struggle with inter-generational transfer – when management and ownership succession are in turn complicated by natural succession within the family as older generations retire and then pass on. In family businesses in particular, discussions about succession are deferred. Who wants to open a discussion with Dad about what is going to happen when he dies? But succession doesn’t go away just because you choose not to discuss it, indeed, it gets closer, and the closer it gets the less well prepared are both the business and the family.
Succession in the family business is a matter that will require the involvement of the family’s lawyers and tax advisers, but it will require someone else too: someone with specialist family business expertise to pull everything together and ensure the right priorities are addressed in the right order. A trust decision taken just for tax reasons, for example, might make a succession problem worse in due course. At Rupert Merson LLP we work with our clients' existing advisers on succession challenges.
Planning for succession
Succession is a process not an event. It includes preparing the potential successors, of course, but it also involves thinking through what will happen to those retiring. A brutal handover of power and a golden handshake might work in a big corporate, but not in a family business when you’re talking about your parents. Then, of course, let’s not forget about what’s in the best interests of the business. Succession is most likely to be successful if the process starts early – and continues long after the act of transfer.
Working with us
For many businesses, particularly family businesses, succession is the most important process they have to handle. It’s also one of the most difficult as it happens so infrequently. Fortunately, at Rupert Merson LLP we help businesses with succession all the time, so give us a call.
