BENEATH THE SURFACE Succession Planning for the Family Business F or the most part, some notable excep- tions notwithstanding, companies in the deep foundations industry tend to be either “family” or “closely-held” enterprises. This tends to hold true across the spectrum of contracting, engineering, manufacturing and distributing firms. The model is typified by companies that have been started by an inventive, energetic, often visionary entrepreneur for whom the “company” was a primary focus of their own, and in many cases, their family’s lives. to 5 generation, new iterations continue to emerge. No matter their technical genre, these companies have much in common, and as their founding generations have grown older, they present a common set of challenges for those who have come after. Unfortunately, for many of these companies, not enough attention is paid to just how the firm will continue once the founder moves on either in years or in interest. Often the emphasis is on years. The founder may be reluctant to surrender the reins to the next generation, or do the unthinkable and sell the business. After all, the company is his/her baby, and often his/her primary interest. For this kind of founder, the company “is what they do,” and for many, it is their core identity, it’s “who they are.” Then there is the issue of becoming aware of one’s own mortality. However, even in these extreme cases of reluctant retirement, most founders eventually come around to the reality that they will not be here forever. There is a different scenario in which the founder is eager to pass the legacy on to the next generation. It is in these latter instances that succession planning has most often been addressed in a timely and structured manner. companies who have entered into their 2 th Don’t Assume Anything When considering how and to whom the company leadership will pass, it is dangerous to assume that (a) the likely heirs-to-the-throne want it, (b) when While this model is most apparent in nd several siblings are involved, that they all have similar interests, goals and skills, and (c) it will go smoothly. Here is where the impor- tance of conscious and con- scientious planning is key. It is critical to not leave it up to chance, or to be less than patently honest about who in the heredity chain is best suited to take on the role of company leader. One cannot simply “wish it to be.” One must address the kind of changes that will inevitably take place, and if possible, in an emotionless frame of mind. This is of paramount importance when several siblings are involved. There are countless cases of founders assuming that their children will want to take the reins. This frequently occurs when said siblings have worked in the company. A word of caution…it may not be so. Moreover, once the founder leaves, an entirely new dynamic may occur. Often there are rivalries that have been held in check by the nature of the pr ior relationships. Some of these may be deep-seated and have little to do with the company itself. Think Shakespeare. Planning for the Inevitable As the management cliché goes, “He who fails to plan, plans to fail.” While this is a cliché it is nonetheless true. Moreover, there are plans and then there are plans. This is to say, any plan must be developed in light of the particular dynamic of the entity for which the plan is being created. Plans do not take place in a vacuum. It is not a “one size fits all” kind of phenomenon. According to business planning consultant, Camm Morton, CEO, VR Business Sales, writing in the August 2015 issue of Forum e-magazine, “83% of business owners do not have a Transition Plan. And further, of that 83%, 49% have done no planning at all!” AUTHOR S. Scot Litke, Hon. D.GE It is advisable that when it is time to address succession — which by the way, should happen sooner-than-later, or sooner-than-too-late — that an outside, absolutely NEUTRAL and EXPERIENCED strategic planner be brought in to develop, not execute, the plan. The execution phase is to be carried out by the assigned parties. The planner should have absolutely no vested interest in the firm, or outcome of the plan. Objectivity is essential as any transition can be (will be) fraught with emotion. Remember, we are talking about a family business. I defy you to provide me with a real-world model of a family that is not dysfunctional to at least some degree. Now compound that reality with the passing on of a company with obligations, assets, liabilities, a structure and culture, and employees, to an offspring, or several, and you can sense that this is not something that is to be undertaken casually. I strongly recommend that any form of succession planning include the participation of those family members, primarily those in the business that will be affected by the plan. This of course may present problems of its own as I pointed out earlier. Not all family members will have the same objectives and goals. Some may want the business to continue as it has before. Others might prefer to take it in another direction. Some may expect to take corporate leadership roles, while others may blanch at the idea of taking on additional responsibility. When Spouses are Involved This may make some of you uncomfortable but in many cases, children have spouses who either work in the company, or if not an employee, have more than a casual interest in succession outcomes. A spouse DEEP FOUNDATIONS • NOV/DEC 2015 • 117
