Risk & Business Magazine CEO/CFO Business Today Magazine Winter 2018 | Page 30

PASSING THE BATON
Passing The Baton:
The Five Winners In A
Well-Executed Business
Succession Plan
A
t my small rural
high school, I joined
the track team to be the high jumper, but with a small
team, the coach volunteered me to be the fourth
runner on our mile relay team. We had one really fast
guy—who was competitive at the state level—two other fast runners,
and me . . . no speed, but the fourth fastest guy on the team. At least,
I was faster than my shot put and discus teammates, and although
all I really wanted to do was the high jump, I reluctantly agreed to be
the needed runner on the mile relay.
It was embarrassing to always get the baton from our leadoff runner
when we were ahead and consistently pass the baton to the third
runner when we were behind.
THE COACH WOULD ALWAYS
SAY, “JUST DO YOUR BEST,
RUN HARD, AND BE SURE TO
SUCCESSFULLY PASS THE
BATON . . . DON’T DROP IT . . .
OUR FOURTH RUNNER IS OUR
FASTEST GUY AND HE’LL MAKE
UP THE LOST GROUND IF YOU
JUST DON’T DROP THE BATON!”
30
MARK SNIDER CLU, CFP® -
PRINCIPAL, SNIDER, FULLER
AND STROH MEMBER,
SUMMIT SUCCESSION PLANNING, LLC
I recently heard a speaker tell a similar
story of a successful family-owned business
where the father liked to remind his son, the next generation CEO,
“Son, when you get to the pearly gates, I’ll be there waiting for you,
and I’ll have one question . . . did you pass the baton?”
A well-executed succession plan is much like my high school mile
relay team—with a goal to successfully pass the baton of the business
to the next generation of leaders. If it is done well, the result is
not just four winners—our goal in each high school race—but five
winners. Let’s briefly identify and consider each of these five winners
and why they each win in a well-executed succession plan.
The first winner is the family and heirs of the owner, whether the
succession plan transferred ownership and control while the owner
was still alive or whether the control and ownership was passed at
death. A complete plan needs to address the transition in event of
death, disability, or retirement, and provide both properly drafted
legal documents as well as adequate funding. The funding often
includes life and disability insurance as well as loans or installment
payments to the owners or their surviving family members. The
heirs obviously benefit from receiving fair value for the business,
which often represents the owner’s main asset after a lifetime of
blood, sweat, and tears required to build a successful company.
The second winner in a well-executed succession plan are the
employees. A successful business only happens if there is a team of
skilled and dedicated employees. Many business owners want to be
certain their loyal and hardworking employees can continue to not
only keep their jobs but also that the company continues to provide
opportunities for career growth and a financially secure future to
current and future employees.