Getting the parties to the table to implement a succession plan is probably the most difficult challenge an advisor will face. Calling in the assistance of a facilitator or life planner can be invaluable in helping a couple articulate their views on their business succession plan and weigh the needs of the business versus the needs of the family.
One advisor I know threw up her hands, looked her client in the eye, and said, "You are always telling me how important leaving a legacy is to you. You are the largest employer in this town... If you don't provide a way for your family to keep the business going in this town, thousands of people will lose their jobs." The emotional plea convinced the client to face difficult issues and look for ways to resolve them.
Business owners and their spouses need to consider how family members are likely to react to their decisions. For example, are there any hurts or rivalries that will be magnified during times of stress? If there are, the issues should be addressed now. Making decisions without considering family emotional and trust issues is a recipe for doom and may result in thousands spent on lawsuits.
Finally, family meetings should be held to explain what each child and grandchild can expect when the business owner steps down or dies. The business owner needs to be clear on why the chosen successor was viewed as best prepared to take over the business. Family members also should be told why they were left out of the business. Family members may not agree with the owner's decisions, but an open discussion will at least give them an opportunity to ask questions.
Don't stop with the family meeting. Let everyone in the client's business organization know about the succession plan and what you are hoping to accomplish.
Let's face it: Some families will never function in a healthy way. But a professional facilitator can put the discussion on the right track. If the family can come to an agreement, the family business will have a chance to survive.
Tere D'Amato is vice president of advanced planning at Commonwealth Financial Network in Waltham, Mass. She can be reached at [email protected].