Seven tips for successful succession planning

Monday, March 07, 2011 | Posted by: Fiona Cullinan
Categories: Business advice, Thought Leadership | Tags: report, strategy, tips, advice, guide, succession planning, ownership, transfer, White Paper, exit strategy, selling a business, transition

History is littered with companies, entrepreneurs and business visionaries who failed to pass on the company baton successfully. If you want to ensure the legacy of your business continues on to the next generation, here are a few pieces of advice…

This is the fourth post of our five-part series on business succession planning – previous posts cover a range of useful advice including a step-by-step guide, problems of deferral, succession planning best practice template, and more.

Although there is no definitive ‘how to’ manual for developing an effective succession plan, our experience shows that the following actions can help the business survive – and thrive – into the future.

1. Start early
Succession planning cannot be approached as a one-time event. Instead, it is a process that should begin long before the owners plan to exit the business. Starting early also ensures you can select from the widest range of options available to you.

2. Commit your time
Getting the business to its current level took time and commitment. A succession plan needs the same attention.

3. Identify your business value drivers
By understanding which parts of the business will be most valuable to a purchaser or other potential successor, you can maximise the value of those assets in advance.

4. Articulate your core values
One way to ensure the business maintains its focus and follows the path you envision is by clearly articulating your core values and instilling them among all your staff.

5. Rely on decision-making frameworks
These can help strip the emotion out of your decisions and provide a roadmap for your successors to follow.

6. Involve your successors in your planning
When key employees, family members and potential investors understand your intentions, they are more likely to support your decisions.

7. Separate your business and family assets
This involves more than adopting internal control processes and performance management practices. It may also mean introducing more formal operating processes – from the establishment of shareholder agreements and employment agreements to holding regular board meetings.

Want to know more? Download and read all about succession planning in our Succeeding at Succession series of white papers.

In our next and final post, we will be looking at how to identify and incentivise successors. If you have any questions now on succession planning or are considering selling a business, contact our Corporate Finance team for tailored, individual advice.

You might also find these links useful:

* Read more posts on succession planning
* Download the white paper series: Succeeding at Succession.
* Read our stories behind the deal, including a business disposal and an international acquisition.