Succession and Exit Planning: Where to Begin

Start with your own wishes

Before involving anyone else, get clear on what you want. Do you want the business to continue in the family, be run by professional managers, be sold, or wound down? When do you want to step back, and what do you want your life to look like afterwards? What income do you need from the business, and for how long?

Write your answers down. They may change, but you cannot discuss something with others until you can describe it yourself.

If you are unsure, imagine two or three different futures, for example a family successor, a professional manager and a sale, and write what each would need from you over the next five years. Seeing the options side by side often clarifies what you actually prefer.

Hold the family conversation early and calmly

Talk with the people affected, one by one at first and then together if appropriate. Ask the next generation whether they actually want to be in the business, what role they see for themselves and what worries them. Assumptions on both sides cause most conflict later.

Be open about the difference between ownership and management. A child may own a share without running the business, and a capable non-family manager may lead it. Separating those questions makes the discussion less personal.

• Who wants to work in the business, and who does not?
• What skills does the business need in its next leader?
• How will family members be paid and assessed?
• How will disagreements be handled?

Make the business less dependent on you

A successor, or a buyer, will find the business more valuable and easier to take on if it does not rest on your personal relationships and memory. Over the next few years, move key customer relationships to others, write down your processes and decisions, and build a management team.

List what only you do today: approvals, supplier negotiations, key accounts, banking contacts. For each, plan how and when it will be handed over.

Also consider the emotional side. Some owners find it difficult to let go of the identity the business gives them. Planning what you will do next, whether mentoring, a new venture or time with family, makes the transition easier for you and for those who take over.

Prepare and develop the successor

A successor needs time to learn. Give them real responsibility in stages, with clear expectations, feedback and the chance to make mistakes while you are still around. Introduce them to key customers, suppliers and the bank gradually.

If the successor is not ready, consider an interim professional manager or an advisory board that supports the transition. Do not hand over authority on the day you leave and expect it to work.

Get the right specialists, and set a timeline

When your intentions are clearer, bring in a lawyer, an accountant and, if relevant, a valuer to advise on ownership structure, wills, tax and, in the case of sale, valuation and process. These decisions have lasting consequences and should not be improvised.

Put a realistic timeline on paper, with milestones across several years, and review it annually. Succession is a process, not an event.