Family business succession is defined as the process of transferring ownership and management of a family business to an incoming generation.
There are two primary elements of family business succession; these are leadership and ownership succession respectively. Leadership succession refers to the movement of managerial authority, operational control, and decision-making responsibilities to one or more chosen successors.
Ownership succession is the transfer of financial assets, legal shares, and equity stakes to the members of the next generation set to take over the business. It may either be done concurrently with leadership succession or separately from it.
The main challenges which family business owners often face with regard to succession planning include managing the pressure that the next generation will face in living up to the previous one, deciding on the right time to start transitioning towards the next generation, and most importantly - selecting the most suitable personnel as successors.
The primary advantages with which proper succession planning provides include ensured business continuity, elevated governance standards, reduced family conflict, and attraction and retention of employees through stability, among others.
To maximize the efficacy of a family business succession plan, some of the steps which the current leadership can take are investing much time and money in training the next generation, establishing viable governance structures, keeping ownership and management where possible, and always communicating transparently. Ideally, the succession plan will not only enable the family business’s tangible assets to be passed to the incoming leadership; its intangible assets ought to be as well.
The succession plans which Evoque Advisory formulates adhere to the broader principles underpinning effective succession plans and place importance on both tangible and intangible family assets - leading to the best possible outcome for your business.
Please contact us at enquiry@evoqueadvisory.com to request a consultation or address any other relevant matter.
