Succession Planning: 4 Key Steps to Ensuring Your Company’s Future

As a business owner, it’s your responsibility to be invested in every aspect of your company. And if you’re like many owners who have built their company from the ground up, you’ve spent years, perhaps decades, honing your business model, developing your products and services, and cultivating relationships with clients.

As many older business owners plan for their eventual departure from their firms, the question we ask our clients is, “Have you invested as much time thinking about what happens once it’s time to step away?”

The number of succession plans being implemented has increased substantially due to the large number of baby boomers preparing for retirement, and a significant number of critical issues must be addressed before handing over the keys. What many people don’t realize is that proper succession-planning can take years. Here are four key steps to take to ensure a bright future for your company in the years to come.

1. Know Your Goals

Knowing your goals may sound simple, but the reality is that getting your desired outcome requires knowing what you really want. What are your life goals? What are you looking for? Legacy? Philanthropy? Family education? What does the future look like? Do you downsize your home or upsize?

Methodically modeling the financial aspects is also important. Consider assets, debts, liabilities and financial-planning. You may have unrealistic expectations. Can I pull the trigger now, or do I need to wait? Business-planning and strategic-planning can help you get a better sense of the potential scenarios.

2. Identify Your Ideal Buyer

There are three main scenarios in succession-planning and transitioning ownership: selling to family, selling to members of your business or selling to an outside third party. If you wish to pass your business on to future generations, you will need to make an honest assessment of the prospective needs of your family and business, the qualifications of any interested family members, and whether the family and your business would be best served by a continued relationship.

If you wish to transition to a member or members of your current firm, focus on the terms as well as the price. Selling your interest in the firm to key employees is one option, it provides a higher degree of employee ownership and helps ensure a smooth transition, with no impact to current clients or the community.

Selling to an outside third party is another potential option. In this case you will need to get your house in order and consider the things that a third party would want to see. You may find it beneficial to consult with outside help regarding the value of your business. A good adviser in the business valuation space may also know of potential buyers.

3. Communicate and Clarify

It is important to communicate with all the interested parties throughout the process. For service companies, such as law firms and accountants, much of the value of the business lies in the employees. It is in your best interest and the interest of your firm to keep open communications with your employees, family members and any other key contingents. This can help provide transparency and mitigate disruption for the interested parties.

4. Build Your Dream Team

The skills that make a successful business person are not necessarily the skills that you need to successfully transition your firm to the next phase. This, paired with the fact that most people only go through the process once in their lives, highlights the need for surrounding yourself with a team of experts.

As succession planning involves a number of different areas, you will want to obtain assistance from your key business and estate planning advisers, including your wealth manager, attorney, accountant, tax adviser, and insurance professional. Meet with them, preferably together, review your succession plan requirements, and direct them to work together as a team to achieve your objectives.

Starting the succession planning process early greatly improves the chances of creating your desired future for your company and loved ones. It is estimated that only 30% of family businesses last into second generation, and 12% into the third generation1. This sobering news reflects the fact that the process of changing company ownership is fraught with potential problems.

Some business owners avoid succession-planning and vow to “die in their boots,” working until the end. This is not a wise decision. The reality is that you owe it to your business, your loved ones and your community to create a succession plan. This will benefit the continuity of your business and benefit your employees and key customers.

1 “Family Business Succession Planning,” Family Business Institute, January 2018.


Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future  performance of any specific investment, investment strategy, or product (including  the  investments  and/or  investment  strategies  recommended  or  undertaken by Private Ocean,  LLC [“Private  Ocean”]),  or any  non-investment  related  content,  made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated  historical  performance  level(s),  be  suitable  for  your  portfolio  or  individual situation,  or  prove  successful.  Due  to various  factors,  including  changing  market conditions  and/or  applicable  laws,  the  content  may  no  longer  be  reflective  of  current opinions  or  positions.   Moreover,  you  should  not  assume  that  any  discussion  or information  contained  in  this  blog  serves  as  the  receipt  of,  or  as  a  substitute  for, personalized investment advice from Private Ocean.  Please remember that if you are a Private Ocean client, it remains your responsibility to advise Private Ocean, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/ evaluating/ revising our previous recommendations and/or services, or  if  you  would  like  to  impose,  add,  or  to  modify  any  reasonable  restrictions  to  our investment advisory services. To the extent that a reader has any questions regarding the applicability of any  specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Private Ocean is  neither  a  law  firm  nor  a  certified  public  accounting  firm  and  no  portion  of  the  blog content should be construed as legal or accounting advice. A copy of the Private Ocean’s current written disclosure Brochure discussing our advisory services and fees is available for  review  upon  requestor  at Please note: Private  Ocean does not  make  any representations  or  warranties  as  to  the  accuracy,  timeliness,  suitability, completeness,  or  relevance  of  any  information  prepared  by  any  unaffiliated  third  party, whether  linked  to Private  Ocean’s web  site  or blog  or  incorporated  herein,  and  takes  no responsibility  for any  such  content. All  such  information  is provided  solely  for convenience  purposes  only  and  all  users  thereof  should  be  guided  accordingly. Please also note: If  you  are  a Private  Ocean client, please  advise  us if  you  have  not  been receiving account statements (at least quarterly) from the account custodian.