Succession planning: It’s not just for retirement anymore

Despite common misconceptions, succession planning is not necessarily solely about retirement. Rather it’s about opening doors for business owners and helping them take advantage of emerging business opportunities.

Succession for survival

Succession planning is crucial for any business—and its reputation and role in the community—to survive. If succession planning isn’t just about retirement, how else can it help a business owner? A succession plan can set the foundation for a number of strategic business moves. In fact, business owners are more likely to have a succession plan in place for strategic business opportunities, such as to prepare for the possibility of a sale, merger or capital raise, according to the 2016 Bank of America Merrill Lynch CFO Outlook.1 More than half (54 percent) of business owners of all ages expect to take some significant business action within the next three years, including a sale, merger or acquisition, divestiture or capital raise in either the public markets or from private investors.1

But whatever the reason, it’s crucial to have a succession plan in place.

Research shows that business owners choose entrepreneurship for a number of reasons, but what stands out is that 54 percent do so to control their own destiny and to achieve greater fulfillment.2 As a result, many business owners are focused on the near-term needs of their operation and have not taken the time to consider their own estate and succession plan. Entrepreneurs languish in the routines that led to their initial success.  Instead, they need to embrace change if their companies are to continue beyond their exit. Best practices for successfully transitioning ownership of a company include: selecting the right advisors, understanding the real value of the business and addressing family dynamics if family members are involved.

To develop a successful strategy:

  1. Select the right advisors: To design an effective succession strategy, business owners need the guidance of a team of advisors that may include a transactional lawyer, business consultant, accountant, private banker, and investment banker among others. Many business owners have pieces of this team in place; to complete the team, they can start by obtaining recommendations from existing advisors and colleagues and conducting interviews. It’s important that businesses develop relationships with these advisors early on and look to partner with people who truly know the ins and outs of their business.
  2. Be realistic about the value of the business: Given that for many business owners their business is a source of great pride it can be difficult to take an objective eye to the value of the business. Have a third party value the company and understand the framework and parameters of the business.
  3. Address family dynamics: While a succession plan may involve family members, current business owners will need objectivity about the future leadership of the company. Start by finding out which family members currently employed by the business plan to continue on and consider what the company needs in terms of temperament, skills, experience and leadership ability. In addition, some business owners establish boards comprised largely of nonfamily members to help professionalize the business.

Many business owners wouldn’t hesitate to invest in the infrastructure of their business to improve systems and processes for long-term growth and profitability—especially if it guaranteed a strong return on investment. Investing in succession planning is as integral as investing in the infrastructure of a business.

A good exit strategy not only prepares a company to capitalize on emerging opportunities, it also reduces its exposure to competitors during leadership changes, protects its assets and helps it to retain important customers through transitions.

Read more: The business owner’s ‘pre-nup’




1 The 2016 Bank of America Merrill Lynch CFO Outlook can be found at

2 U.S. Trust Insights on Wealth and Worth® study, 2016

Print Friendly, PDF & Email

Leave a Reply

Your email address will not be published. Required fields are marked *

Predefined Skins

Primary Color

Background Color

Example Patterns

demo demo demo demo demo demo demo demo demo demo

Privacy Policy Settings

  • Required Cookies
  • Performance Cookies
  • Functional Cookies
  • Advertising Cookies
These cookies are essential in order to enable you to move around the Sites and use its features, such as accessing secure areas of the Sites and using Vistage’s Services. Since these cookies are essential to operate Vistage’s Sites and Services, there is no option to opt out of these cookies.
These cookies collect information about how visitors our Sites, for instance which pages visitors go to most often. These cookies don’t collect information that identifies a visitor. All information these cookies collect is aggregated and therefore anonymous. If you do not allow these cookies we will not know when you have visited our site, and will not be able to monitor its performance.

Cookies used

Visual Web Optimizer
These cookies remember information you have entered or choices you make (e.g. as your username, language, or your region), and provide enhanced, more personal features. They may also be used to provide services you have asked for such as watching a video or commenting on a blog. They may be set by us or by third party providers whose services we have added to our pages. If you do not allow these cookies then some or all of these services may not function properly.

Cookies used

Google Analytics
Gravity Forms
These cookies are used to make advertising more relevant to you and your interests. The cookies are usually placed by third party advertising networks. They remember the websites you visit and that information is shared with other parties such as advertisers. If you do not allow these cookies, you will experience less targeted advertising.