Why Do We Wait Until The Last Minute?

Joe Schmieder

“We have a looming transition with no real plan.  Not sure why, but my father has just now decided he would like to get out of the day-to-day operations and sell the business to my brother and me before the end of the year!”  Why do senior family leaders often wait until the last minute to address succession?  Is it simply human nature?  Hard charging family entrepreneurs are more inclined to work on growing and developing the business than to work on family leadership and ownership planning.  Succession is not a topic that people dwell on because it usually only happens once in a generation.  It is tough when a patriarch or matriarch has to select the next leader amongst three children or go outside the family for leadership.   Deciding how to transition ownership is another difficult task – should the stock be sold, gifted or some combination?  Should those family members working in the business get more stock, a controlling interest?  How can this be done fairly? These are tough questions that cannot be addressed quickly.  Thus, they tend to get delayed or avoided.   Yet the keys to successful transitions are communicating and planning.  Most family business leadership and ownership transitions take three to ten years depending on size and complexity of the business and family.   Since succession is long-term, complex and emotionally-tied to family dynamics, a succession task force that includes independent outside board members or othertrusted advisors often works extremely well to keep the process objective and moving forward.   The main goal of a task force is straight-forward:  to ensure an effective leadership and ownership transition.   Members of the task force provide guidance and checkpoints to keep the process moving forward in a positive manner, making adjustments along the way when needed.  This takes a huge burden off the senior family members and greatly improves the probability that both the family and business will continue to prosper in the next generation.

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