Ranking the Top Succession Planning Models
I’m spoiled. I grew up in a family business where my father investigated all the top succession planning models, and then picked the very best one for his printing company. It was a brilliant move that benefitted the family, company, employees, customers, suppliers and community.
This happened when I was in my mid-twenties, and in the years since, I’ve seen way too many printing owners doing the complete opposite of my father. They’ve embarked on succession planning models that failed miserably.
I decided to list the four most prevalent succession planning models, and then give you my vote for the top one for you to follow:
- Family Succession – In this model, all responsibilities and decision-making is transferred to specific members of the family. The pros include keeping the business in the family, and providing a livelihood for future generations. The cons include a very good chance for sibling in-fighting and a dysfunctional relationship. It can lead to some very ugly power struggles, and you can’t just go and hire a new family. This is for keeps.
- Executive Management Succession – This involves selling your business to members of the executive management team. This was one option we considered when my father was selling his business: I actually had discussions with members of the top management team. The pros include ensuring a consistent transition and loyalty to the organization. The cons occur if someone on the management team turns out to reveal different colors once they get a taste of power. Also, the executive management team might not be able to bring in outside resources, such as capital, quite as easily.
- Spouse Succession – There are cases where an owner will die and leave the printing business to his or her spouse. This can work out extremely well if the spouse is interested in the business and has good natural talents and experience. But without the talent or experience (and the recognition that outside help needs to be brought in), the pro of keeping the ownership structure and philosophy consistent can quickly turn into a con.
- Merger and Acquisition Succession - Okay, by this point you’re wondering which option my father chose. It was this one: The merger and acquisition model. He sold his business to a company with deep resources and a commitment to success. He also stipulated that his family and employees would continue their employment as part of the arrangement.
It’s why I rank the M&A succession plan at the top. Through an M&A, you can get the best of all worlds: Quick access to resources. A replacement “patriarch” to mediate any potential family in-fighting. A structure that allows family to keep working, as long as they’re productive. And a company that is committed to success.
Regardless of which succession planning model you choose, let me close by saying that you absolutely need to choose one of them. Create your succession plan to ensure what you built today will be a positive legacy for future generations.
(Photo by fredericknoronha)
Rock LaManna is the President and CEO of the LaManna Alliance. The LaManna Alliance helps printing owners and CEOs use their company financials to prioritize and choose the proper strategic transition – including mergers, acquisitions, organic growth, and exit / succession plans.