For many family business owners, succession is a big challenge. However, it results from our experience that family business succession can be managed if the family finds an answer to five key questions:
1. What do we want to do with the family business as a family?
The starting-point of any succession plan is to ask what the family wants to do with the business. If the aim is to dispose of the family business as soon as possible, there is obviously no point in embarking on a family succession process. So, succession planning should begin by asking about the family’s vision for the future as owners. This will be set out in an ownership plan. The ownership plan also has to be aligned with the strategic plan for the business.
2. Who will lead the family business?
If the family decides to keep the business in the family, they need to find a competent and motivated leader. This leader may be found from within the family or outside.
3. What is the future governance model for the family business?
Succession often involves a change in how the family business is governed. A succession plan will therefore frequently entail the creation of an active board of directors. Family governance (family charters and a family forum) becomes also very important.
4. What roles will everyone play in the future?
Depending on the succession arrangements, those involved may well take on a new role. The current leader will look for another role. The son and/or daughter could be the new leader. Other family members may become shareholders for the first time. To avoid conflicts, it is vital that everyone knows what rights, duties and responsibilities their new role entails.
5. How is ownership organised?
Transfer of ownership must take place in a legally and financially conclusive manner.
We are convinced that answering these five questions correctly will lead to a good succession plan.