Many of you started a business hoping to make the world a better place. You understand that to make a lasting impact, you must sustain success for years, even decades. At some point, leadership or ownership succession will happen. If that's something you've started thinking about, congratulations! The odds are that you've found plenty of material on critical steps, building a solid leadership pipeline, or succession strategies.
That information is all very similar to the advice my father got while creating our business's succession plan. Luckily for me and our family-owned commercial printing company, he took decisive steps that nobody recommended as critical at the time: hiring multiple outside advisers with diverse viewpoints years in advance.
I understand your temptation to gloss over this often overlooked and underappreciated advice. Working with consultants can be time-consuming and tedious, not to mention expensive. So it was with my advisers. They were worth every minute and every penny.
The types of external advisers that will be most helpful to you will depend on the skill sets of your internal succession planning team. When we went through our planning process, three types of experts stood out as the most useful: succession consultants, tax advisers, and lawyers. Beyond hiring different types of advisers, lining up those with diverse perspectives is vital.
1. Succession consultants
Looking back, the most beneficial adviser for me was a succession consultant. These professionals have hyper-specialized expertise, enabling them to offer guidance to fit your unique circumstances. For instance, you may want to engage future owners with no working role at the company. Perhaps you'll need to have productive conversations about who may want to exit ownership. Succession consultants have the background and knowledge to offer sound advice for nearly every situation.
They can also identify the critical foundational work that should take place before succession planning begins, which can take years to complete. After this is in place, you can start narrowing down your options, which may include transferring ownership via a trust, hiring a CEO outside the ownership group, or selling and buying shares between generations while retaining a family member as CEO.
You'll need to know how those decisions will affect your company's financials, including taxes, and how you would structure the deal so it has the best chance of becoming a reality.
2. Tax accountants
Historically, the role of tax accountants has been to help companies avoid potential tax burdens. But good tax accountants can do far more than that, especially when they have deep succession planning experience. They can work with your accounting or finance team to prepare for the day-to-day impacts of the succession plans you're exploring. Importantly, you'll want to know if and how this affects your company's balance sheet.
Once your tax accountant clarifies the financial implications of your plan, you will need to delve into how to structure the legal agreements.
3. Law firms and legal advisers
Detailed, in-depth succession plans are complicated, and nuances abound. Law firms with ample succession planning experience will help you navigate legal complexities and compliance issues. In addition, legal advisers can help mitigate future legal risks and liabilities. Be aware that their counsel may differ from your other advisers. For instance, you may like the strategies your succession consultant says fit your situation perfectly and that your tax accountants find efficient but your legal advisers believe will create undue risk. Clearing your succession strategy with your legal team can help determine whether you're ready to move ahead or return to square one.
Constructing a fail-safe leadership pipeline can involve dozens of people and hundreds of moving parts over many years. You'll want to enlist your first adviser long before you expect succession planning to start. Not only does it give you time to lay the critical groundwork, it will also allow you to explore your plan from every angle and pivot if needed. In addition, working with a diversified team of subject matter experts will help boost your odds of success. If done right, your succession planning efforts can secure your legacy and benefit your customers -- and the world -- for generations.
BY MICHAEL DILLON, ENTREPRENEUR, SUSTAINABILITY NERD
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