What are these steps or stages in the succession planning process?
- Firstly, all members of the family need to work through a process of awareness and education so that they understand what is involved in succession planning. One key factor is understanding that we need to separate management succession and ownership succession. That is, resolve who, when and how the enterprise will be managed going forward separately from when and how and to who, assets will be transitioned.
- We need to undertake a needs review of all stakeholders. That is, we need to understand the needs, frustrations, desires and ambitions of all the current owners and the future successors. This needs to be done individually to allow everyone to speak their mind openly and free from the pressures of a group meeting.
- The next step can sometimes be one of the most challenging. Discussing and negotiating through a process to arrive at a position of alignment and agreement in principle. This process can take some time and often involves some “give and take” from all stakeholders. This is usually not something that will be resolved in just one meeting.
- Having worked through this process the next stage is to formulate the plan into a formal document or documents. To do this we are likely to need some advice and input from your accountant and solicitor. Dealing with any potential tax issues is important as is structuring something that is legally robust and also integrates with your wills and estate plans. Your wills and estate plans may need to be updated as part of the process.
- Finally, we need ongoing improvement and support. As our plan is implemented adjustments may need to be made to accommodate changes in circumstances, and some form of ongoing support will often be needed to ensure the plan is actually successfully implemented. Having come this far it is often all too easy to fall back into old habits or “business as usual” without some form of external or independent support.
Leaving succession to your kids to “fight it out” after you are gone is not the answer in our view. It is as much about organising and planning your own future as it is about providing some certainty and a future for your kids.
This is a challenge but also an opportunity that needs to be grasped with both hands. Putting it off usually doesn’t resolve anything, but can add to intergenerational frustrations and a breakdown in relationships.