“It’s never too soon to think about succession” was the premise for a recent IBJ thought leadership series discussion. As Huntington Private Bank’s Dan Griffith observed, “Every single business will go through a transition at some point, whether it is a sale, a transition to the next generation, or a liquidation,”
Advance planning, Andrew Williams of Calder Capital added, achieves several important goals:
- mitigates the risk associated with losing key personnel:
- maintains customer and investor confidence
- maintains the momentum of business operations.
Conversely, Roger Engelau of Inspire Results cautioned, the lack of advance planning is a “catastrophe waiting to happen”, potentially leaving a company vulnerable to disruptions negatively affecting employees, customers, and family members.
At Geyer Law, we refer to the process of succession planning as “setting your business up for success”. Aspects of business law included in “succession-planning-from-the-start” include not only drafting business formation documents, partnership and buy-sell agreements, and employment contracts, but working along with clients’ tax advisors and insurance professionals to set “whatever-comes” plans in place.
In an earlier blog post titled “Think About the Unthinkable”, we urged business and practice owner to have a plan in pace to ensure they will be able to – no matter what happens – “extract the value” of their business.
One reason business transitions can turn out to be so very complex is they involve – or don’t involve – family members. A very common scenario is that one child might have made a career working in the family business, while other siblings may have careers of their own. To avoid later conflicts, our attorneys offer to facilitate in-person or virtual family “conferences” hoping to enable open discussion among present owners and future heirs.
At the IBJ succession planning discussion, Andrew Williams remarked that “on this side of COVID, all businesses should be much more in touch with the impact of not having a solid plan in place.” They definitely should, we realize as legal counselors. While business disruption can be caused by many different events or developments, the pandemic served as a stark reminder of the need for succession planning.
– by Cara M.Chittenden, Attorney with Rebecca W. Geyer & Associates