From my thirty-five years experience as a business succession planner, I have recognized that significant percentage of advisers including attorneys, accountants, estate planners, financial planners, management consultants, family therapists, portfolio managers and insurances executives claim to be involved in some aspect of business succession planning. However, few have totally dedicated their careers to this unique and potentially very challenging segment of business consulting. As a result, business succession has not been clearly defined and as a result many business owners fall short of their goals.

Please forgive me if I come across as being academic, but in order fully understand business succession, I am going to define a few terms.

First, an often confused first cousin, business continuity.

As the term describes, business continuity is the continued existence of a business, as in the business continues. Business continuity planning addresses the mechanics of the transfer of a business to the next generation irrespective of the performance or continuity of the business after the transaction. In other words business continuity can be achieved if the business is transferred to Junior/Sis without any consideration as to whether Junior/Sis has any earthly idea as to how to own or operate the business.

Business continuity planning can involve any number of independent projects including but not limited to

• Selection of Directors
• Strategic planning
• Sale of stock
• Gifting of stock
• Development and adoption of stockholder’s agreements
• Leadership recruiting
• Management recruiting
• Employment contracts
• Estate planning
• Life insurance acquisition

The fact is that the vast majority of advisors think they are doing business succession planning are actually involved in a business continuity project.

Succession as the term proclaims is the continuity of success. Therefore, in terms of business, succession describes the continuation of business success through the next generation of owners and managers. Planning for the continuation of success is the primary focus of succession planning.

Business succession planning is a process (not a project) that addresses the identification and confirmation of successor owners and management and the effective transition of a culture of success. In order to achieve Succession Success_sm it is important to understand and address the interdependent issues ( which is the opposite of independent projects) of the Succession Matrix_sm.

Understanding the makeup of the Succession Matrix_sm is important so that business owners, family members, managers and succession advisors can avoid being blindsided by problems. Reciprocally, understanding of these issues empowers a succession planning team to pro actively avoid problems or capitalize on opportunities that impact the achievement of the succession strategy. 

Next thoughts, the Process of Business Succession Planning....