Peering Into The Unknown

Conversations about succession planning at an advisory firm often start when its founder asks, “What if I got hit by a bus?” As a founder myself, I can tell you it’s easier getting run over than planning an orderly succession. Certainly easier than strategizing.

If such a thing were to happen at my firm, Accredited Investors, we would come together through crisis as we have in the past. Whenever our firm has had any kind of upheaval, the staff has united to figure out how best to get through it. A crisis following the hypothetical bus accident I’m in would mean certain people would step in to handle my management and client responsibilities as CEO.

Secondly, clients would understand that I am no longer around, which means they must make choices about whether to stay. We have a team concept at Accredited, so I suspect most clients would continue to work with the other people on my team.

There is also insurance to help tackle the financial repercussions of my sudden absence. So we have grappled with a crisis situation. But there’s more to think about when founders sell their practices.

First, founders are selling the past to cohorts buying the future. At Accredited, we currently have 10 shareholders, including my founding partner, Wil Heupel, and me. With all the people who have ever worked here, we have built a sustainable company. But its future may well be different than its past.

I once spoke with a couple of shareholders exploring an idea about which I was not enthusiastic. As they were discussing things, I became distracted considering whether I was coming from the past or looking toward the future. When Wil and I were running the business, we could set a direction we agreed about, but we were also able to recalibrate quickly if we wanted to.

Now, with almost 50 employees, things are more muddled. The truth is I am still confused about when I am paving the way and when I am in the way. I suspect both things happen. I asked the shareholders at this meeting which one it was. I also asked for reverse mentoring—I need a better understanding through their eyes about the things that they need from me and the things that are no longer necessary.

As the firm continues to take on shareholders, the overlap between our common objectives diminishes. When Wil and I started the firm, we were similar ages, our kids were similar in age, and we had many shared interests. Every subsequent shareholder had something in common individually with others, but fewer shared things with the entire group. This has a huge impact on our decisions, because we often conflate what is best for ourselves with what is best for the business.

As more shareholders come in, what is best for each of us begins to get marginalized. This means a lot more compromise and hurt feelings. And if the shareholders don’t communicate those feelings, the tension permeates the room. The only way to handle this is through open dialogue.