Succession planning, business transition planning, business succession planning and exit planning: These are just a few of the terms that business owners see in messages, posts, and newsletters from their CPAs, attorneys, investment advisors, life insurance agents, business consultants, business brokers, and even their bankers. Unlike business succession consultants, many of these professionals have added exit or succession planning to their core practices. Regardless of what they call themselves, all mean well: They want to contribute their expertise to help business owners transfer their companies to family members, employees or outside third parties successfully.
How do You Choose from the Menu of Business Succession Consultants?
To owners, the transition of their businesses to successors can seem overwhelming because their own well-being and that of their families and companies are at stake. In the personal realm are their financial security, career legacies and moving on to a meaningful life after they leave their businesses. On the business side are the future success of their companies, job security of their employees, customer relationships and even the well-being of their communities. And especially for owners who hope to transition their companies to the next generation, there is a host of other issues to consider: the willingness and ability of the next generation to lead, treating all children fairly, and aligning their departure with the readiness of their successors, to name just a few.
With so many moving pieces and priorities and so many professionals active in the business succession arena, it is not easy to know where to turn for help. For that reason, we have created a list of guidelines that you can use to find the best consultant for you, your business, and your family.
- Define what a Successful Transition Means to You.
As you research or interview various consultants, you’ll find that not all define success in the same way. The trick is to find one who shares your definition.
For example, owners who wish to sell their companies for the maximum price often search for investment bankers who either focus their practices on a particular industry or are generalists who specialize in selling companies within a certain valuation or revenue range. They look for bankers with track records of closing transactions with both financial buyers (e.g., private equity groups) and strategic buyers (e.g., companies that make acquisitions to gain synergies from the transaction). .
We suggest that you think carefully about what goals you want the transfer of your business to achieve. Is selling your company for the best possible price your only priority? Do you have other goals that are just as (or more) important to you than your financial goals? For example, do you want your company to remain in your community? Do you want your key employees to keep their jobs? Do you want your children to be involved in your business after you leave?
As Transition Strategists, our definition of a successful business transition is one that:
1) Achieves an owner’s most important quantifiable and experiential goals.
2) Places a business in the hands of a successor prepared to assume the responsibilities of ownership, leadership, financial management, and operations once held by the prior owner.
3) Positions a company to be as successful under new ownership as it was under past ownership.
4) Launches owners into the next meaningful, financially secure, and exciting phase of their lives.
- Ask for Referrals.
Some owners who want to explore their options start their search for a business transition advisor by asking former owners whom they know to tell them about the advisors who helped them transfer their businesses. That can be a good place to start if the owners you ask share your definition of success!
The professional advisors (e.g., attorney, and CPA) you work with can be a good source of referrals if they’ve worked with their other clients who have gone through a business transition. If or when you tell one of your advisors that you are thinking about your future business transition, highlight the goals you’ve set for your transition and describe the skills, practices, and qualities you are looking for in an advisor. Perhaps these characteristics include responsiveness / availability, size of their firm, experience (number of years in practice with companies in your industry or of similar size), creativity, problem-solving skills, past results, demeanor, and / or cost / payment terms.
- Ask Questions.
Just as you describe your goals and ask your referral sources probing questions, you should feel free to ask the consultants you interview as many questions as it takes for you to feel comfortable making your choice.
In addition to asking how a consultant defines success and about other issues like those listed above, you might ask them to describe how they handled a situation similar to yours in the past. Ask prospective succession consultants how they coordinate their work with other advisors, and to describe how they approach work through conflicts. If you are interviewing a consultant who is part of a firm, you might ask which type of work will be done by the lead consultant and which by others—either associates or specialists in the firm.
- Watch and Listen.
We suggest that you carefully observe how a consultant communicates with you because you will want (and likely need) their insights into how you can communicate most productively with others about delicate topics that may crop up during a transition.
If, for example, you think a key employee could be an ideal successor, there is an art to probing the topic with that person without raising expectations or making promises. There are also best practices to consider when telling all employees about your future succession plans. As you observe consultants, do you find them to be persuasive, positive, or patronizing? Are they good listeners and empathetic? Do they seem prepared, confident, and do their communication skills complement yours?
- Look for the Consultant’s Guiding Principles.
Mission statements can offer insight into how consultants operate, but in our practice, we created and adhere to a list of Guiding Principles that both helps owners understand how we conduct ourselves in all our relationships and how we hold ourselves accountable.
People first
- We always assume that others speak and act with the best of intent. We strive for individual growth and to make a difference in people’s lives.
Independently accomplished and resourceful
- Because we know our stuff, we can be proactive, lead, and focus on what’s most important.
Gracefully nimble
- We pivot, stay the course, clear obstacles, and explore better ways to be our best and achieve optimal results.
Positively playful
- We value lightness and use laughter to open new possibilities and resolve the most challenging problems.
Curiously engaged
- We are constant learners and creative teachers and mentors who explore possibilities and challenge the status quo if that’s what it takes to create a better future.
Quality achievers
- Others can count on us: We are accountable for our commitments and take pride in our work.
Genuinely transparent
- We choose authenticity and transparency over perfection.
Choosing Your Business Succession Consultant
Choosing the right person to guide you through one of the most challenging and exciting phases of your career is an important step in taking charge of your transition journey. And the consultant you choose is just that—a guide. You are the captain of your transition journey, and your guide should put your objectives before their own.
We’ve worked with hundreds of owners over the years, and all who have completed our transition process have gone on to the next meaningful phase of their lives. They have honored their most important relationships and left behind companies that continue to be successful under the leadership of competent successors. We would be happy to discuss your concerns and dreams for your business transition and explore whether we can help you to achieve your goals.
