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Succession planning: Don’t bring a knife to a gun fight

Barb Dartt Published on 06 November 2015

“We need some help with succession planning,” the caller said, by way of introduction.

“My brother and I get along well, and we’re in great financial shape. My brother’s son has been back from college for two years now … it’s time to figure out how we can make him an owner. Can you help us with that?”



A call that straightforward always makes me nervous. Turns out that while these two brothers did get along well, it was mostly because the business was big enough for them to manage their own enterprises with minimal interaction. And when I interviewed them one-on-one, it became clear they wanted very different things for the business as a whole.

Knife No. 1 – Lack of clarity among owners about what you want for the future of the business

Often, partners suspect they have differing visions for the ideal future of the business. In this example, Bill wanted to continue adding cows and, eventually, the next parlor at another site. Scott, Bill’s partner, appreciated that the business finally matched cow numbers with barn size, parlor capacity and lagoon space. Scott was ready to maintain the same size and revenue for the foreseeable future. I learned about these perspectives when I interviewed them one-on-one.

Bill had suspected Scott didn’t want to grow. He’d read into Scott’s comments about magazine articles that highlighted fast-growing dairy businesses. And he’d assumed that Scott’s reluctance to borrow any additional money meant he was anti-growth. However, Bill and Scott had never talked directly about these perspectives. Bill’s son, David, coming back to the business was what brought the misalignment out into the open.

Now that Bill and Scott want to develop a succession plan, they needed to answer these questions: 

  • What do we want to accomplish through our shared ownership of business assets?
  • What do we and our business stand for?
  • What legacy do we want to pass on to subsequent generations?
  • What does it take to qualify to be an owner?

Scott, who placed the phone call I mentioned above, indicated he was interested in some assistance in David gaining business ownership. However, without a vision, without answering the “what” questions above, there is no guidance on how to make David an owner.


Often, taking the time to answer the aforementioned questions feels pretty abstract. However, my experience is that a clearly articulated vision is the foundation on which a lot of very tangible succession decisions rest. A strong vision provides direction for specific business decisions – like whether or not to expand, how much risk to take on and whether or not to hire key non-family managers.

In addition, a clear vision can help you decide how to transition ownership. Once Scott and Bill sort through their apparently different business visions, that alignment will help them answer questions about future ownership. Should David have to buy in, or would both his father and his uncle gift him some of their ownership?

Will David’s siblings and cousins (who aren’t likely to work in or manage the business) get to be owners? If so, what decisions will they get to make? And how will a managing owner and non-managing owners communicate? The ownership structure that fits best for your family should align and support the joint vision for the business’s future.

A clearly articulated vision that you have developed through a series of discussions among business leaders is truly a “gun” that is required to approach business succession.

Knife No. 2 – Lack of understanding that both ownership and leadership must be transferred during the succession process

Family business complexity is a result of three different systems that overlap and interact: the family, business management and ownership. As businesses and families grow, the complexity of these three systems grows, too. Family members join management and ownership teams, non-family executives join the management team – and sometimes the ownership team, too. The number of families expands and often spreads out geographically, making it harder to stay connected to each other and to the business.

The growth and overlap of these systems makes succession seem pretty complicated, often causing business owners to grab the most straightforward issue there is: ownership transition. Working with tax and legal advisers, a plan can certainly be made to move ownership from one generation to the next while minimizing taxes. You meet with a lawyer, create a new entity or two, get documents drafted and signed … and feel like you’ve gotten something accomplished.


When Scott placed the call above, he indicated it was time for David to become an owner. That’s a pretty common approach. However, in most family-owned businesses, ownership transition simply does not address the complexities of succession for the family and business management systems.

Successful succession must also provide for the transition of family and business leadership. This process isn’t nearly as tangible as ownership transition ... and as I’ve mentioned in previous articles, it can be some of the hardest work business owners do in their careers. It nearly always requires folks to give up doing something they are good at and love to do in order to make room for the next generation to learn and develop.

A leadership succession plan answers questions like:

  • What does it take to be a manager in this business?
  • How will we train successors in the skills they need?
  • When will the current generation be willing to give up some control over decision-making?
  • What if no family successors are qualified?
  • How will the senior generation stay connected with what’s going on in the business?

Ensuring that you create a plan for transition of both ownership and leadership is another “gun” that is required to develop a successful succession plan.

Succession is complicated. When well done, it involves a process that can be hard to maintain the momentum for. Start with joint discussions around the future of the business – what you will and won’t do. And then be ready for a process of both ownership and leadership transition. If you’ve got those building blocks in place, you’re ready for the journey of succession.  PD 

Barb Dartt is a family business consultant with 16 years’ experience supporting folks in business with family.

Barb Dartt
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