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Succession Planning – Building Business Legacy While Maintaining Family Relationships
Nov 11, 2020

by: Luzita Kennedy, Managing Partner and Gerald Pulvermacher, Senior Advisor

The term “succession planning” has an air of ambiguity to it. People use the term loosely to define their particular angle on it.

When lawyers make reference to succession planning, their objective is to make sure that trusts and wills are well crafted and not open to misinterpretation. Their objective is to transfer assets from one generation to the next in a fashion which, to the extent possible, protects the family wealth and business.

Wealth, investment, asset managers and banks define succession planning as the process by which they assist high net worth families manage their assets for growth and preservation. They’re primarily concerned with either growing or sustaining the family’s wealth, and ensuring that the next generation is apprised of the strategy. They often like to play an educational role with the next generation to help them become more aware of growth and risk management strategies.

Insurance Brokers view succession planning as an opportunity to provide insurance policies and other products to protect assets and minimize taxes upon the transition of wealth.

Tax Accountants also focus on wealth preservation whether within the family or in the business. They also advise on the use of vehicles such as 401Ks, pension plans, annuities and the like.

Frequent Strategic Reviews

Succession planning as a business transition to the next generation

PulvermacherKennedy and Associates’ (PKA) focus in the area of succession planning is characterized both by what we do, as well as what we don’t do.  We’re not asset managers. We’re not bankers, or lawyers, or accountants or pension sales representatives. Our focus is on transitioning the family business from one generation to the next in a deliberate and well thought out manner which is, competency and data-based that serves the organizations’ best interests and the families who built them.

There isn’t a “one size fits all” approach to effective succession planning of a family business. Understanding the ecosystem is key to aiding families in implementing a plan that fits their particular context. While business growth and sustainability are essential, the biggest concern expressed by patriarchs and matriarchs is avoiding unnecessary conflict that could tear a family apart.

Taking practical steps to protect the family and the business

Through a tailored approach, PKA guides its clients through the process of successfully transitioning the business from one generation to the next. Part of our engagement strategy involves creating family charters to help establish parameters, clarify the patriarch’s wishes, and outline the development plans for potential successors objectively.

Through an assessment process borne out of years of experience working with family-run businesses, we can identify development paths and help next-generation leaders clarify and think through their vision of the company. In a multi-generational setting, each instance of taking the proverbial baton from the previous generation and running with it may mean taking the business in a different direction. Different parties may have conflicting views, which can simultaneously be a source of tension and an opportunity for growth. Our role is to help patriarchs and the next generation navigate this transition process to benefit the businesses without disrupting the family.

Build the business to last

Patriarchs have a desire to see their hard work sustained by the next generation. Succession planning supports this objective. It uncovers answers to pressing questions like ‘Who are our next generation leaders, and what are their developmental needs?’, ‘What governance model will be supportive to the family and the business?’ ‘What family dynamics are at play which may be disruptive to the succession planning process?’

Successful businesses are deliberate and systematic about adapting to remain relevant, competitive and sustainable. Organizations need to be designed to facilitate the process of change without it being a destructive force. Revisiting the company’s mission, vision, and values is a helpful anchor point. Do they still hold true? Do they need adjusting? Frequently needed in conjunction with a solid succession plan is a review and refreshing of the strategic plan to ensure it promotes business longevity.

Over the years, PKA has worked closely with current and next-generation business leaders and their executive teams, helping them to achieve optimal individual and collective performance.

To find out more about how we can assist your business, be sure to reach out.

 

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