Succession Planning for Family Businesses

"My business is my retirement." You realize it's worthless right? Less than 1/3 of businesses ever sell. And you have NO succession plan. Yet you think someone will magically walk in the door with a check one day? Harsh truth: → Your business might be your life's work. → But to everyone else, it's just another asset. Your business is only worth what someone will stroke a check for it. → The market's flooded with businesses. → Buyers want turnkey opportunities. So, what's your REAL game plan? 1. Get clarity on the valuation Consider doing it like this: → 3-5 years of tax returns → Use a discounted cash flow model → Compare this to a multiple of EBIDTA This is the first thing we do for our business owner clients. We need to understand the true enterprise value and how it fits into the plan. 2. Build a succession plan → Groom a family member → Identify a key employee → Prepare for a sale You don't need to be dead-set on one of these. But you should have an idea in mind for at least one of them. 3. Assemble your dream team You can't go at this alone. Everyone you might need: → Exit planner → Accounting firm → Financial planner → Business attorney → Insurance advisor → Investment banker → Estate planning attorney Some of these roles can be done by 1 person. For example, we often play Exit and Financial planner, plus insurance advisor for our clients. The key is that they are all on the same page. 4. Diversify your retirement portfolio Your business can be a part of your retirement plan. But it shouldn't be the whole plan. Consider investing in: → Other businesses → Real estate → Stocks You need to acknowledge the risk that your business may not sell for what you think. All this to say... I understand where you are at. You've worked SO hard for your family. This business only proves that. But the stress is mounting. Your kids are never getting younger. You don't want to miss another soccer game. And you need a way out. You've always thought about planning. Now is the time. Need help figuring this out? Let's talk. My team has all the resources behind us to help you exit with clarity.

One of the biggest challenges facing the Family Office industry is succession planning. Many Family Offices were established to manage the wealth of a successful entrepreneur and their direct descendants, and as these individuals age there is often a lack of a formal succession plan in place. This can create uncertainty and risks for the future of the Family Office, and its ability to preserve and increase the family wealth. So, how can the Family Office industry navigate this challenge? 1️⃣ Initiate Conversations: Start the dialogue early. Engage family members in discussions about the future of the Family Office. Transparency is the cornerstone of effective succession planning. 2️⃣ Identify and Nurture Talent: Recognize potential leaders within the family. Provide them with the tools, knowledge, and mentorship they need to step into pivotal roles seamlessly. 3️⃣ Professional Guidance: Seeking external expertise can be invaluable. Financial advisors and succession planning specialists can offer insights and strategies to fortify the transition process. 4️⃣ Document the Plan: Formalize the succession plan in writing. Clearly outline roles, responsibilities, and the overall vision for the Family Office. This document becomes the roadmap for a smooth transition. 5️⃣ Regular Review and Adaptation: The only constant is change. Regularly revisit and adapt the succession plan to align with evolving family dynamics, market trends, and financial landscapes. Succession planning is not merely a task; it's a commitment to the enduring prosperity of the Family Office. By proactively addressing this challenge, we not only preserve the legacy but also ensure a thriving future for generations to come. #familyoffice #advisor

I have been helping a client with succession planning for the past three years and I tell you from experience, it's a process! Succession Planning is a business strategy that ensures operations continue smoothly after the leader transitions out of the business. So even if you're transitioning leadership to your children, give yourself five years to fully plan and prepare for it. Have a team to help you (including a corporate lawyer, financial advisor, CPA, succession planning advisor, valuation specialist, HR consultant). If you're thinking about exiting your business, here are some things to consider from a financial perspective: 1. The valuation of your business: a financial expert will assess your assets, liabilities, cash flow and potential for future earnings. 2. Current fiscal health of the business: The financial performance of the business directly impacts its valuation. Knowing fiscal health helps successors understand the true value of the business. 3. Your money team: Are the right accounting, financial and HR professionals in place to support the business even after you exit? 4. Ensure you have enough funds: Make sure you can cover the costs of exiting and retirement 5. Documentation - Make sure you have records of all financial policies, procedures and authorizations. 6. And, DEFINITELY have a fractional CFO on your leadership team to manage all of this as you move through this monumental moment in your life. Ready to talk with a CFO about succession planning? Schedule a financial consult at the link in the comments. . . #business #finance #smallbusiness #money

Go from Solo founder to family empire with these five things: Create something your kids will want. 1. Succession Plan: It isn't about television drama. Once you have something to hand over, document the strategies for smooth transitions of leadership and ownership within the family. Make sure your estate plan is consistent with your business succession plan. 2. Shareholder Agreement: Passing ownership off to more than one person or keeping part of the ownership for yourself? Have a shareholder agreement that defines rights and obligations among family shareholders. The more you treat itt like an arms-length business the better off you will be at Thanksgiving. 3. Conflict Resolution Plan: Have an actual procedure for mediating and resolving disputes between family members involved in the business. Write it down, and have a neutral mediator on call. You will need it. 4. Corporate Governance: Don't have bylaws? Get them. Implementing governance structures to ensure transparency and accountability is especially important when more than one of your children are interested in taking over the biz. 5. Managing Dual Roles: There is a reason corporations have nepotism policies. You cannot avoid hiring family in your family business, but you should address legal considerations when family members hold management and ownership roles. And some advice from someone who has been on both sides of this: If your kids propose a change to your operations based on new technology - roll with it. It might be what takes you from good to great and will give them ownership of the very thing you want to pass on. Now, let's go build generational wealth! Yours, Cody Hand, your expert General Counsel and Strategic mastermind #blowupthebox #succession #familyentertainmentcenter

Two critical areas are emerging as top priorities for Family Offices: private equity investments and succession planning. According to the latest Deloitte report, these priorities are driven by the dual objectives of achieving robust returns and Family Offices the continuity of family legacies. Private equity continues to attract significant interest from Family Offices, offering opportunities for substantial returns and direct involvement in business growth. The Deloitte report highlights that 2024 is expected to see a surge in private equity investments by Family Offices, driven by several factors: 1. High Return Potential: Private equity investments have consistently outperformed public markets, providing Family Offices with opportunities to achieve superior returns. 2. Family Offices appreciate the ability to exert more control and influence over their investments. This involvement ranges from strategic decision-making to active participation in company boards. 3. Diversification: With a broad array of sectors and geographies to choose from, private equity allows Family Offices to diversify their portfolios, mitigating risks associated with market volatility. Equally important is the focus on succession planning. Ensuring a smooth transition of leadership and preserving the family legacy are paramount concerns. The Deloitte report underscores several key aspects of effective succession planning: Family Offices are increasingly recognizing the importance of early and comprehensive succession planning. This involves identifying potential successors, providing them with the necessary training, and gradually introducing them to leadership roles. Establishing robust governance structures is crucial. Clear guidelines and policies help manage conflicts, define roles, and ensure accountability. Engaging external advisors can provide unbiased perspectives and expertise. Advisors play a critical role in facilitating family discussions, mediating disputes, and offering strategic insights. While the focus on private equity and succession planning presents numerous opportunities, it also brings challenges. Family Offices must navigate complex regulatory environments, manage intergenerational differences, and balance short-term gains with long-term objectives. However, with meticulous planning and strategic execution, Family Offices can turn these challenges into opportunities. Leveraging private equity to achieve robust returns and ensuring a seamless succession can solidify the Family Office's position and preserve its legacy for future generations. #familyoffice #familyoffices 

PE investors acquiring family businesses has become increasingly common in the US, that being said, EY research shows more than 65% of upper middle market family business (business with revenue of $100m to $3b) owners want to transfer their companies to the next generation, even though less than 25% succeed. EY Family Enterprise Business Services Managing Director James B. Wood and I collaborated on an article highlighting the risks family operations can face during generational transition and strategies that can address these issues. Parallel governance ― establishing separate governance structures for the family and the business, with clear communication and direction flowing between the two ― often works best to support the cohesion, stewardship and competency needed to sustain a healthy business for generations.   https://lnkd.in/gYUegSnP #ey #eyprivate #familyenterprise #familyoffice #familybusiness #parallelgoverenance #governance #generationaltransition 

🚀✨ Empowering Business Owners: The Power of Preparation in Succession Planning as You Grow ✨🚀 In the dynamic landscape of business ownership, preparation is the key differentiator between success and regret. Today, I want to share a tale of two businesses in the same field, of similar size, that considered selling at the same time. They had vastly different outcomes in their succession journeys. 🌟 Business A: The Power of Proactivity Business A understood the value of foresight and preparation. They dared to seek advice well ahead of any potential transaction, understanding the nuances of what a buyer truly values. By embracing this proactive approach, they built a robust strategy and, through informed implementation, positioned themselves as an irresistible proposition when the buying season arrived. The result? Business A secured a successful sale on its first attempt, attracting several excellent suitors. Its journey and transition were seamless, and it found itself aligned with a company that shared its vision and values. 💡 Key Lesson: Trust in preparation, embrace foresight, and seize opportunities with courage. 🔔 Business B: The Cost of Complacency Conversely, Business B chose to navigate the succession process alone, believing it possessed the knowledge to handle its succession adequately. After all, they also advised their clients about M&A due diligence. Despite their confidence, they were unprepared and didn't consider the buyer's mindset and expectations. Despite enlisting premier M&A firms along the way, it took three arduous attempts to secure a buyer. The aftermath? Regret. Not only did Business B face challenges in selling its business, but it also found itself disillusioned with the outcome and the company it sold to. 💡 Key Lesson: Friendly advice: never underestimate the power of preparation or the wisdom in seeking guidance. The tales of Business A and Business B highlight the undeniable significance of preparation in succession planning and preparation. Founding owners often have a high-risk tolerance, significantly different from their respective buyers. As business owners, being prepared gives you the choice to take advantage of the opportunities as they present themselves. Running the business you founded and getting it ready for a future owner require radically different skills and mental approaches. It takes time, energy, and resources to do both successfully. Your thoughts? Let's ignite a discussion in the comments below! 🔥🚀 ----------------------------------------------------------------- 🖐️Enjoy my content? If this was helpful, please let me know in the comments below. DM me if you want to come to our next webinar. I'm Adrian Bray. I share insights on growth, middle market, and exit preparation and planning. Click on my profile + follow + 🔔.

A bit about succession planning. The news that Rupert Murdoch is stepping down and his son Lachlan will succeed him is a seminal event in media, politics, sports, and entertainment. I've worked with News Corp. They are tough, bold, courageous, and extremely smart people. It comes straight from the top. It is how Rupert operated and how he expected his people to do business.    News Corp. is transcendent, operating on the world's stage and wielding incredible influence. What's next is already under intense speculation. While Lachlan introduces the world to his leadership style and business values, the moment underscores a key strategic objective that Founders must constantly consider: succession planning.    It's a Founder's responsibility to develop a succession plan alongside a growth strategy. The two may seem in conflict, but they speak to the fundamentals of leadership. A formalized structure (regardless of the timeline) also guards against the variable of sudden change, one I experienced at Forstmann Little. The impact or his passing transcended our company and many others. It also ultimately led to my founding of Bruin Capital.    Having the right succession plan in place can profoundly impact the business. If successful, it will be a testament to the company's originator - demonstrating fundamental strength of what they have created. An extremely good case study in succession planning is the National Basketball Association (NBA) and Commissioner David Stern handing the reigns to Adam Silver. Adam was a widely respected executive, yet there was a transitionary period before he formally took the role. After the transition of power, David continued to be a resource to Adam and the league.   Succession planning is a process. It should be thoughtful and experimental. Doing it right can take a decade, from identifying candidates, to pressure testing ideas and capabilities, establishing a long-range plan, and surrounding the potential successor with the best team and support system.     Undertaking this not only can ensure a company's upward trajectory but it can also revitalize employees and uncover unimagined potential. All Founders/CEOs need to guard against the downside of routine and regimentation. Consistency is an insurance policy against downsides, but can also inhibit critical and imaginative thinking. Succession planning creates a natural environment for employees to raise game-changing thoughts and ideas without seeming radical or disruptive.   Ultimately, with succession planning, you're really serving the greater good of the company's mission and, if you have investors, creating an insurance policy in their minds for its future. That, to me, anyway, is the definition of leadership. https://lnkd.in/eTY4KWgQ

Up to 83% of Baby Boomer Businesses are expected to sell or change hands in the next 5 years. What I'm hearing in conversations with these successful business owners is a great reminder that people still matter. In preparing for an exit strategy, making sure that the business goes to someone that will take care of the people and the legacy that they've worked hard to build is a top priority. Here Are 5 Way's Infinite CXO Can Help Your Business Plan & Execute A Prosperous Transition #1. Start Planning Now - to maximize your valuation and shape your desired outcome, it may take 3 to 5 years. Valuable opportunities to maximize your return need #exitplanning. Whether selling to an outside stakeholder, looking for a new Owner/Operator or handing it over to your family, planning is a winning formula. #2. Guide Your Successor - be flexible in your thinking about your extended role. The new owner or even someone internally will find immense value in your institutional knowledge. I'm seeing a lot of family handoffs where alignment and flexibility need to be laid out. #3. Don't Stop Growing - both the business and yourself. Companies are most attractive when there is a visible roadmap of growth. I recently heard a story of a 3rd Gen HVAC owner who let go of his employees to lower the expense on the P&L and show more profit. His business was now worth $0. #4. Culture Matters - to the value of your business. People just aren't an asset, their belief in your mission, vision and core values are. I recently had lunch with an owner of a Venture Capital Firm and he said the greatest mistake that VC partners made in the last 5 years was to not consider Culture as the pathway to sustainable growth. #5. Find a Partner - to be your guide. One that can not just help you sell but help you grow while you sell. Infinite CXO is helping companies just like yours strategize, plan and execute a prosperous exit. We aren't the only one's that can help you, there are other great companies out there. However it is our passion to Empower Hidden Potential. Make 2024 the year you build your #exitstrategy.

❓ Are You Ready to Shape the Future Leaders of Tomorrow? ❓ Are You Cultivating Leaders or Followers? ✅ The Answer(s) Matter!!! Lead by Example in Succession Planning & Career Transitions In my experience as a leader, I've learned that effective succession planning and career transitions are vital for any organization's growth. Here's how you can lead by example in these areas: 1. Transparent Communication: - Share your vision and goals for succession planning openly with your team. - Encourage honest dialogue about career aspirations and growth opportunities. 2. Identify & Nurture Talent: - Recognize potential leaders early and provide them with mentorship and training. - Create a culture where skill development is valued and supported. 3. Lead with Empathy: - Understand individual team members' career goals and help them align these with the organization's objectives. - Show genuine interest in their professional development. 4. Encourage Cross-Functional Experience: - Facilitate opportunities for team members to work in different roles or departments. - This broadens their skill set and prepares them for diverse leadership roles. 5. Model Adaptability: - Embrace change and demonstrate how to navigate through uncertain times. - Show resilience in the face of challenges, setting a strong example for your team. "Leadership is not just about giving energy... it's unleashing other people's energy." – Paul Polman #LeadershipDevelopment #SuccessionPlanning #CareerGrowth #EmpoweringTeams Engage with Us: How do you foster growth and readiness in your team for future leadership roles? Share your insights and strategies in the comments below!