Leading a company through growth and success is a deeply satisfying experience. Customers, employees and stakeholders all enjoy the benefits of corporate expansion. But the time comes when a CEO or leadership team members want to move on or retire, and that’s when it’s really important to have an effective business succession plan.
Part of being an exceptional leader is planning for the company’s future without you. Knowing that corporate leadership is in good hands will allow you to step back comfortably and pursue the next chapter of your life. Creating a business succession plan enables you to be confident that the company will thrive moving forward. A skilled business attorney can help you plan and craft a business succession plan that is specific to the unique needs of your business. One size doesn’t fit all when it comes to choosing and preparing future leadership. To find out more about how Weisblatt Law Firm can help, call us at 713-666-1981. Attorney Andrew Weisblatt welcomes the opportunity to offer you legal guidance.
The Steps to an Effective Business Succession Plan
Following are 5 important tips to keep in mind when creating a business succession plan uniquely suited to your company:
- Identify the primary characteristics a successor needs to possess. This will depend on the age and industry of your company. Obviously, deep scientific knowledge may be important for the future leader of a pharmaceutical company, whereas keen financial knowledge would be important for a community bank CEO. Beyond these, there are some universal leadership characteristics that are important to every industry – integrity, vision, agility, honesty, and stamina are just a few of many critical leadership qualities. Remember that the next company leader doesn’t need to be a clone of the current leader; he or she needs to be the right person for where the company is headed.
- Determine an inclusive and methodical selection process. Whether you choose an internal candidate or outside talent for the new leadership position, it’s important to create a detailed process for reviewing and selecting the best candidates. Don’t leave it until the last minute, when you may be tempted to hurry the process. Business succession planning is something you should do long before a current president or CEO decides to leave. Every executive should keep their eyes open for promising internal talent and develop these people. Also, using an external search firm can be helpful when it’s time to look at other candidates.
- Once a business succession plan is created, review and update it periodically. After your plan is in place (hopefully long before you leave), revisit it annually to make sure it is still up to date and contemplates current company needs. This is a living document that can evolve over time, depending on economic headwinds and industry trends. Be sure to include emergency measures in the event of unanticipated departure or death of an owner or executive.
- When a decision about new leadership is made, communicate it quickly and effectively companywide. Employees, suppliers and constituents get nervous when there’s uncertainty. This can be especially true when uncertainty is prolonged and the rumor mill is in overdrive. You can avoid this by creating a communications plan in advance so that an announcement of new leadership is swift and comprehensive.
- Create time for a seamless transition and hand-off, but don’t hold on too long. Once you’ve identified a new company leader, it’s important to have overlap time so that he or she can become familiar with products and processes. An existing leader can have a large impact on the future success of their successor. Make sure you groom a successor and provide the tools they need to fill your shoes. This can be done during a period of transition or through a consulting arrangement. It’s also important to know when to let go and let the new person take the reins on their own.
Succession Planning Examples
There are different kinds of succession planning considerations. Following are a few examples:
- Succession planning for family businesses
How do you transfer leadership when many or all members of a company are part of the same family?
- Succession planning for sale and transfer of ownership
How do you transfer leadership when a company is sold?
- Succession planning for surviving spouses
How do you transfer leadership when a partner dies or gets divorced and there are existing spouses that may be entitled to assets?
- Succession planning for mergers
How do you modify leadership if your company merges with or is acquired by another company?
- Succession planning for exit strategies
How do you transfer leadership when a partner unexpectedly leaves the company and wants to cash out their ownership interest?
- Succession planning for business debt
How do you transfer leadership when there may be significant ownership or business-to-business debt?
All of these issues contemplate unique aspects of succession planning that must be considered when leadership of a company changes hands. There are more succession planning examples not covered here, and a skilled business attorney can review those with you.
Contact Attorney Andrew Weisblatt to Help with Your Business Succession Planning Needs
Business succession planning is an intricate and multi-pronged process that should not be done in a vacuum. Now more than ever, this is a process that requires wide input and contemplation of multiple scenarios. That’s why it’s so important to start early, giving yourself and others time to decide what’s important in a future leader of your company. The last thing you want is to rush into a decision only to regret it later.
Attorney Andrew Weisblatt has helped countless companies, large and small, craft a comprehensive business succession plan. He understands the opportunities and pitfalls of this kind of planning, and he can assist you in creating a process for the smooth transition of company leadership or ownership. His years of legal experience as both in-house counsel at large businesses and outside counsel give him a unique view of the succession process. To find out more about how he can help, contact Mr. Weisblatt at 713-666-1981.