On April 7, 2019 the New York Times Magazine published an article chronicling the rise and influence of the Fox media empire. The article was titled “Planet Fox”. I expected the article to be a little dry but it was actually more like an episode of “Game of Thrones” – endlessly fascinating, villains, aging patriarch, multiple heirs apparent, power and more power…and ultimately “Who’s got the power?”
What really struck me was the endless backstory. Which son would take control of the Fox empire? Would it be Lachlan – the elder or James – the innovator? As the Times put it “Over the years, Lachlan and James had traded roles, more than once, as heir apparent and jilted son.” At one point a counselor was brought in who dealt exclusively with dynastic families. Needless to say, the roles continue to switch with the patriarch still in firm control at age 86 and no clear path for the future.
This is a “form” of succession planning. It seems to be a cross of Game of Thrones meets Lord of the Flies. Whoever holds the conch holds the power until a dragon swoops in… or something like that. This form of succession planning is actually done – quite frequently. It is what happens when a decision is put off because declaring a “favorite” is too hard, emotionally charged or just plain unclear. Frequently we falsely believe that there will always be a tomorrow to deal with uncomfortable decisions. Plus - we are having too much fun to think about not being in control of the company.
As business owners approach retirement age, it is expected that we need to have a plan in place. But honestly life events can happen at any age. Retirement is not the only reason to have a succession plan in place. Unexpected life events can happen at any time or any age. A succession plan should be in place on day one of your business.
In an article posted on August, 2018, Inc. Magazine shared an interesting survey conducted by Wilmington Trust. They found that nearly 60 percent of small business owners do not have a succession plan in place. When surveyed, the majority of owners without a plan said that they enjoy managing their business too much to even think about a transition of ownership. Forty-four percent of owners believe succession is still too far away in the future to be concerned about. Is it really??
Life can come at you fast. Just as we all should have a personal will to designate personal bank accounts and property, we need a “business will” to ensure that your wishes for your company are carried smoothly and efficiently leaving your employees and/or partners with a clear path forward.
Honestly, I am not too worried about Rupert Murdoch’s family and what will happen to them should Rupert pass on without a clear plan and designated leader in place. Somehow, I think that they will all sort it out. I imagine that they have enough lawyers in place to do the heavy lifting. But I am concerned about the rest of us.
A smooth transition of ownership starts with some basic key decisions and the organization of your company’s financials. But you need to know what these key decisions are and how to go about starting the conversation.
That is why I hope to see you at our next 2 Office Hours Kennett presentations on Business Succession Planning. Our April 25th presentation centers on the “How to” from the Financial perspective as explained by Josh Shaver from Diamond State Financial.
· What options are available to me?
· How do I make the decision?
· What information do I need to gather to make a good decision?
· What are the tax considerations?
· Financing options? Good idea – or not?
This is only a partial list of what will be covered.
May 23rd presentation follows with the Legal Perspective as explained by a great team from MacElree Harvey.
To get the complete picture, you must consider both financial and legal points of view. I honestly think that this is one of the few opportunities that will be available to the general public to get this kind of input.
I hope to see you at The Creamery. Bring a friend or your business partner. Don’t let no plan be your plan!