Find Your Guide Before Commencing Your Succession Journey

The Twelve Dangers In Family Business Succession

1. Lost – A Forest - The traveller has not sought advice from an experienced guide and has lost their way.

Succession can be a treacherous journey even for those who have treaded the path before and many a family have faltered and failed in their succession attempt by travelling alone. The calm voice of an independent succession advisor can be invaluable as they bring a reasoned and objective voice to the table.

Every business is different, every family is different, and every individual is different, but the journey of succession is a common trail and the strategies, barriers and dynamics for succession can be applied to assist you in your journey. An experienced independent succession advisor can use this knowledge and guide you through your journey. Their map of succession will allow you to orienteer your way to the successful outcome you seek.

It is also difficult to step outside a process, to see the forest for the trees, so as to see where you are and where you should go to next. Find the right advisor (a professional not a friend) and allow them to guide you.

Choosing Your Guide

One of the first tasks you should undertake is identifying an independent succession advisor who will be able to bring to your table an objective, professional and independent view for you to consider and act upon.

The first and most important selection criterion is that you must trust them and be able to work with them as your advisor. They may well tell you things that you do not want to hear but should consider, and therefore an open relationship of trust is important. The trust arises from the fact that they are professional, objective and independent. In other words, they know what they are talking about and have no vested interest in the outcome save for being the right outcome for your family.

Your advisor does not need to be a legal, taxation or financial expert but they do need to be a succession expert. They will seek legal, taxation, financial and other advice as required from your existing advisors or others as you choose. Sometimes existing advisors are too close and have vested interests in the outcome and without even necessarily recognising it, can find themselves conflicted.

Existing advisors can also sometimes be too close and too connected with people within the family’s circle/community. An independent succession advisor is not connected with those circles and comes to the family with clean hands and therefore can be trusted as an arms’ length advisor.

Your succession advisor must understand succession, must understand business and what makes businesses successful and must be an excellent communicator and facilitator. Specialists (mergers and acquisitions, taxation, etc.) can often come to the table with a single perspective because of their expertise and day-to-day work and therefore bring with them a tunnel vision. Mergers and acquisitions specialists may think only of the sale deal and not see the family relationships, a taxation person may go straight to the tax implications and not firstly seek to identify and understand the capital value drivers.

A succession advisor will act as a business strategist by identifying all the elements at play and then orienteer a path through them to achieve the final succession outcome.

Choose your independent succession advisor carefully.

Here is a brief video clip that speaks into this theme with links to the full video and resources: