Succession Planning

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


Category: Succession Planning

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About the Author: Holly Swan

Holly Harben Swan; Managing Director and Wealth Strategist Holly Harben Swan is a Wealth Strategies Advisor at U.S. Trust, Bank of America Private Wealth Management. In this role, Holly works with high net worth individuals and their familie…

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