Succession planning isn’t rocket science: if my launch booster is chosen over your design, you’re unlikely to alter the thrust coefficient calculations to blow it up on the launchpad, let alone spend ten years in therapy trying to control your stratospheric rages.
That would be silly; we’re steely-eyed missileers, after all. The need to keep our short-sleeve shirts aggressively starched works our nerves more than objective decisions about fin design and nozzle angles. Yet in matters of business-succession planning, with a focus on family-owned firms and farms – well, we’re lucky that dueling is so incontestably illegal.
I love to watch true-crime docudramas. Rebecca, my editor, favors podcasts on murders in the Midwestern outback and the dread serial killers all around us. I know this well: she calls me past midnight; somehow, she can’t sleep. We both favor cases of family ‘redrum’, as aficionados say; it’s so gruesome, we can’t look away. It’s so dreadfully common, this wrangling past the point of control, all for a fair share of the family’s greeting card business.
I must correct this deviant analysis: this scenario isn’t widespread at all. Business and farm succession stories usually end happily, and there are no podcasts on that. Again, I misspeak: there certainly are, but no sensible person would take time to listen, when ‘Top-10 Decapitation Murders on Fishing Cannery Ships’ (on Rebecca’s playlist) is premiering at 8:00 pm Central.
Well, dear readers, that’s why you tolerate me – I do the dirty work, within reason. You want digging done in your crawl space, though, leave me out.
It’s like anything else: there is good advice out there, and bad. If anyone counsels that succession planning can be self-accomplished by sensible folk, they’re fools. ‘With these handy online tools’ it’s easy, they say. I tend to trust the US Army, which has undeniable experience: the easy way is always mined.
The worst thing to do is sit on your hands. Don’t wait for a ‘good time’ to plan. All writers, even blog scribblers, are intimately entwined with that temptress, alluring yet faithless: procrastination. Take it easy; give your brain time; wait ‘til those creative juices flow down your chin; the things she says – so wicked. Rebecca has built an impressive career writing anodyne corporate claptrap, fortunately not always under her byline, yet how often I hear my phone ring after midnight:
‘I’m on a deadline! I need you to write five press releases for me! I don’t have the time!’
Drop softly dead, I reply.
‘I’ll pay $100 an hour’! Now I’m awake – what is the topic? ‘The Argentinian polo championship – extended highlights’ or ‘Annual meeting of synthetic rubber producers – introductory remarks’. How I do sigh.
It’s never about anything I enjoy, like permanent life products or tax alpha in estate planning. You know, the sexy stuff.
This raises an issue: succession planning should never be driven solely by tax issues. Yes, taxes are ever important and given uncomfortable signals coming from Washington, everyone’s jittery these days. Yet tax mitigation is not a goal in itself: it is a facet of the plan that guides you to the target. Keeping the farm in the family for another generation or two, moving the business into a new product segment, taking the firm public – these are proper goals. Tax mitigation is a defensive tactic, not an aim in itself.
Sadly, when planning for success, there will be tasks, as if ugly with warts, that must be grasped with fervor. I think it was Goethe, or perhaps Jerry Lewis, who said that success is founded on facing the hardest jobs first. Fault lines in families must top your agenda. If left to the passing of the firm’s founder – often a parent – you can expect the tectonics to rise in complexity and grind all the harder.
This kind of tardiness is, unfortunately, common. So first off, start mending fences. Build sensible compromise and find common interest. The key concept to grasp: there is family, and there is business. Yes, they’re usually entwined like a bag of amorous snakes. Expert advice suggests that drawing a hard line between these two spheres can cool the most contentious of headbutting relatives.
If a family counselor is needed to heal troubling dynamics, hire one, yet keep this in mind: whatever the emotional issues, they’ve nothing to do with stock options, voting rights, net income, fuel costs, Biden’s inheritance tax proposals and so on – the real stuff that needs sorting.
Keep focused on common interests, and emotions will get swept to the side, at least during board meetings. And guess what: experience suggests that family conflicts are salved by fruitful business cooperation. Common cause and making a good living brings people, even rancorous siblings, together.
We can’t take emotion entirely out of the picture, because, ultimately, the family will be talking about death. When parents pass on, their kin may find Mom and Dad were the linchpins ‘round which everyone circled. It’s tough to replace their leadership in thinking, sentiment and loyalty, which is why choosing successors is often so fraught, even in successful cases.
Professional mediators can help solve hard issues. In my family, we had an easy choice in our elder brother Paul, the last truly sensible clan member. “But I don’t want to be ‘dad’,” he said – he’s a professional writer; they live in their dreams. ‘Too bad, you’re it,” sang the sibling chorus. He’s herding us cats to this day.
Next up, don’t skimp on your planning team. You’ll need a certified public accountant, an experienced lawyer, a trusted banker, a top insurance expert, and a financial advisor savvy in your industry. Assemble a team or find a one-stop-shop for the job, but whatever you do, don’t think one professional can handle the task.
Finally, the family must know that whatever they plan, execution is key, with full commitment from everyone. So gather your team, and play ball.