Unexpected Events That Can Derail Your Family Business Succession
Succession is often not thought about until the very end of someone’s business life, when they begin to say, I think I need to step away from my business.
At that stage, honestly, it’s too late. A succession plan can be pulled together in 6 to 12 months. It requires everyone to come together and work together, but the work to build the business and the family to allow that to occur smoothly starts and should start much earlier.
Not only is there preparatory work that must be undertaken to support a strong succession process, but there are also many unexpected things that can happen, which can adversely impact the succession process.
Some of these are:
- Death, illness or injury within the current leadership, the new generation of leaders or key management team members, and any of their family members, which weaken the existing or future leadership team.
- Rapidly changing market conditions that impact revenue, profit and therefore capital value.
- Complex and messy corporate structures that have been built for tax or commercial purposes, which are simply not suitable for transition and need to be reworked over time.
- Family disputes and divorces, which crush family harmony and require asset settlements.
- Breakup between business partners, which results in conflict and litigation.
All of these events will impact your ability to undertake an effective succession process, and rushed planning can only diminish wealth.
The earlier you start, the cleaner it will be and the more prepared you will be to address any of the above events.
Here is a short clip that speaks to this theme:
