Family Business: A Brief Guide to Succession Planning

Family business succession planning can be defined as the process by which a business owner plans to transition management and ownership of their company after retirement. In a family business, this can often be a complex process, as family dynamics and personal relationships must be factored in. Family business owners may wish to consult a variety of professionals to ensure their succession planning results in a smooth transition. These may include accountants and financial planners, banks, insurance advisers and lawyers. Dr Edgar Paltzer is a lawyer who counts succession planning among his areas of legal expertise and is experienced in assisting family business owners to make the right decisions for themselves, their company, their employees, and their families. 

Aligning Strategies  One helpful process business owners can explore is aligning the strategies of their business and their family. This includes looking at whether the business could survive sudden disability or death of the current owner, how well positioned the business is for long-term viability, and whether the strategic plan of the company currently supports the values and vision of the family.  

Preparing for Succession 

Preparing for succession requires making a decision as to which family member, family members, or non-family employees will take ownership of the business following retirement and what their roles will be. This includes looking at what steps need to be taken to prepare them for their new responsibilities. Planning ahead is essential – if someone is being primed to eventually take over the company, they will be better prepared if they have already spent several years working their way up through the ranks, rather than suddenly being placed in charge.   

Conflict and Communication 

One of the trickiest aspects of many family business successions is the potential for conflict. Decisions will need to be made in the best interests of the future of the business, but this could conflict with the wishes and expectations of certain family members. One of the best ways to address this is with open and honest communication from the earliest possible stage. Involving family members in decision-making throughout the lifecycle of business ownership can help to give them a clearer picture of why certain decisions are being made and how they  have been arrived at. This can also help to generate more trust in the current leadership of the business, as well as reducing the chances of conflict further down the line.