Succession Planning

Planning the transition of a family business to the next generation is one of the biggest decisions a business owner will make.

Successful succession planning ensures not only the future successful of a business, but the future of a healthy family as well. This requires clear and honest considerations of the current and future generations, and their role in the business moving forward.

A key component to a successful transition plan and implementation involves alignment around values. Alignment, although sometimes difficult, will help ensure a smooth transition. Many families strive to find alignment on questions such as:

  • Are we committed to the continuity of the business?
  • Would we ever consider a non-family CEO?
  • How will we make decisions together?

Quad Group helps families work through these and other questions in order to find alignment as owners of the business. Sometimes families already have an ownership group, but other times we help develop a group that enables families to address some of the questions around vision and values.

We look at this process through two lenses: Leadership Succession and Ownership Succession. We separate these interests to help families navigate the unique decisions associated with identifying the future owners, and future leaders, of their business.

Leadership Succession

The succession of the leadership of a family business is based on answering questions pertaining to the family’s expectations around leadership:

  • Does the leader of the Company have to be a family member?
  • What if the rising generation is neither qualified nor interested?
  • Is the family open to a non-family leader?
  • How can the family prepare the rising generation, etc.

The answers to these questions are not often simple or clear. Family leadership is dependent on the skills and interest of the rising generation. We work with the family to create development plans that may include a mentor relationship, acquiring industry knowledge, and/or building leadership skills. To help ensure clarity around roles and responsibilities for family, we work to help establish an effective family governance model as well.

Non-family leadership is an effective solution if there is no one in the rising generation who is qualified or interested in running the family business. We work with families to create a vision for how to work with a non-family leader. We have introduced various family governance models to achieve balance with the need for the business to thrive while keeping the family values and vision intact. This is an opportune time to set up a family board or an advisory board.

Ownership Succession

Ownership succession is focused on the transition of stock from the current generation to the future owners. We facilitate this process with clients using a variety of vehicles. The work that has been done on vision, mission and values helps to bring forward the priorities of the family. If the family wishes to keep the business in the family ownership, we help find solutions that meet the transitioning owner’s retirement needs, with the desires of the rising generation. This may include some combination of gifting stock to the rising generation or selling stock to the rising generation.

Our goal is to work in partnership with the business owners to identify the best solution, and then assist in implementing it. Our work with family businesses has included creating new ownership groups, designed to bring family owners together to address a variety of topics. We believe that a healthy ownership group has alignment on key components (e.g. mission, vision, values, codes of conduct, etc.). A future step is to develop policies for the family that might include family employment, liquidity, family participation, social media guidelines, communication and/or decision-making.

If the family is not committed to future family ownership, we help identify the right solution, potentially identifying an equity partner, selling the business to a management group, or executing an ESOP.

Just as no two businesses are the same, neither are any two families. Representing several family ownership and transition models ourselves, we know any solution to transitioning a business to the next generation must be customized. We work with each family and each business to identify their unique needs and goals. We are committed to finding the right solution for your business and your family.