Successor to Your Family’s Business? What You Need to Know!

Baby Boomers are retiring in ever-increasing numbers—10,000 per day by one estimate! Many of these Boomers are retiring from a business they have carefully and lovingly built over many years of sweat, tears, and much fulfillment. And as the child of a Boomer, you’re now faced with the possibility of succeeding your parents in owning and managing that business. Or perhaps your interests and careers are elsewhere, and you want to see that business successfully transferred to someone outside the family who will continue to serve the business’s clients as well as your parents have. Or, realistically, you and your parents want to reap the full value of that business when it is dispositioned.

So, how can you and your parents ensure that transition is successful? What do you need to know, and who do you need to consult? Business exit planning does not have to be overly complicated. But it does have to be thoroughly planned and executed, ensuring the critical aspects are adequately addressed.

As the daughter or son of a retiring family business founder/owner, you will want to ensure your parents are well-prepared for a life of retirement and perhaps of travel, volunteering, time with grandchildren, and worry-free leisure. Your discussion with your parents about their retirement often begins with: What are they going to do now that they’re retired? How will they ensure they have meaning and purpose in their lives since these are so closely related to living a long, healthy, fulfilling life as they enter their later years. See “I’m Retired! Now What?” for more on leading a long and fulfilling life after retirement.

The second topic of discussion with your parents usually revolves around the question of what to do with the business when they leave. Will you or your siblings want to take over leadership of their business? Are you ready to do so? These are often very difficult discussions to have, yet very necessary. Has your family had open, frank discussions about what will happen to the family business—especially if it’s not clear who should manage the business when more than one of you wants to take on that role?

Or will you want to see the business successfully sold to a key employee or other third-party? Are you prepared to help your parents make that choice if they seek your advice? Is this a family decision, or one to be left solely up to your parents?

These are only the beginning discussions and actions that need to be undertaken as part of business retirement exit planning. We’ve covered this topic much more extensively in “Business Retirement Planning: It’s a Team Effort!” and suggested that an exit planning coach can be of much value in guiding a retiring business owner through the process.

Business succession planning requires allowing enough time to consider all the choices to be made and enough time to implement those choices. It’s important to start your planning early and to put the plan in writing. Whether you choose to work with an exit or succession planning coach, a business coach or consultant, or do it yourself, start early. Starting to plan too late or failing to plan at all are the two primary reasons so many business transitions fail, an outcome which is totally avoidable. So, start planning now!

Published in AAC, Best Practices, Strategy, Work-life Balance