Anyone who has watched HBO’s TV series ‘Succession’ will know how convoluted and challenging, not to say downright manipulative, even sadistic, succession struggles can be. So what have you done about a succession plan for your business? Who will be taking on the leadership of your company when you step down? Have you taken steps to ensure it doesn’t become a ‘drama’?
One answer may be that you intend leaving the challenge of succession to a future acquirer, however that could be a mistake – here’s why.
No one knows with any certainty how and when their tenure as owner and leader of their business will end. Even the best plans can be upset by events and circumstances. An effective succession plan is a great way to mitigate those uncertainties and strengthens your position, both while you are still in charge and if selling your business is your eventual form of exit.
You might want to consider a succession plan for many reasons including:
- Reducing the dependency of the business on you which is a key part of exit planning.
- Opening up options for alternative types of exit, such as MBO (management buy-out) or EOT (employee ownership trust), as selling to an external acquirer is only one way to pass on your business ownership.
- Enabling you to stop running the business in planned steps. Your exit doesn’t have to be a one-off event, in fact a phased step-down may be the better option for you, your managers and the business.
- Providing a future acquiror with greater confidence in the business’s continuity. No buyer wants the risk of the business falling away as soon as a deal is done so unless you are going to stick around (with potential retentions and conditions on payments) an in-house succession plan provides you with an easier exit path.
- Offering you a combination of support, challenge and new ideas. Whilst you are still the owner of the business and active in its running you will want to ensure continued growth. A strong management team provides that extra capacity and capability, and eventually increased business value.
- Providing you with the assurance that the business can continue in the event you are ill or need to take time out for any reason. There can be many reasons, both planned and unintended, why you may be unavailable to the business and if your absence might be detrimental to the health of your company having a capable management team may be just the answer.
If you think of succession planning as something different or in conflict with your current perception of an exit plan, have a re-think. The well-planned development of your ‘number two’ or management team will reduce uncertainty and lead to a better, and possibly more valuable exit. And be assured, HBO’s depiction of the ‘Succession’ isn’t what we have in mind (series three launches this Autumn)!
Let’s get your exit plan underway – reach out to us to start a conversation.