AMA: I'm Darren Smith and I've just implemented a business succession plan, Ask Me Anything!

jenny.brown

Thank you for the question 

What would you do differently

Personally I don’t tend to spend too much time looking backwards in the rear view mirror and what I could have done differently.

In terms of the succession event and process there is nothing I would do differently; it was very quick and it was respectful. We had been preparing for it to happen at some point but the opportunity arose and we embraced it. Probably the bit I was a little underprepared for was the emotional rollercoaster which was compounded by the speed of opportunity to execution.

Similarly with the business in the lead up, we had spent considerably focus on building a stronger and more profitable business.  We knew that if we remained focused on building a strong business and…… delivered value to the clients that we looked after that we would have something that was attractive to many.

In hindsight we certainly were focused on the right things, the question I have asked myself is whether we could have embedded some of the changes more quickly. The short answer is yes, particularly around business efficiency.

What worked well

• The business was ready and I was personally ready
• The business was in good shape and attractive to many potential buyers
• The business was well regarded and we were proud of what we had jointly created
• Facilitated a great outcome for all stakeholders involved: business owners, staff, clients and the purchaser. 
• We had nutured a potential acquiror over many years and created an environment of advocacy and respect
• We had progressively evolved the business and focused on building a strong culture and team which survived beyond me.

Certainly! Succession planning is crucial for ensuring a smooth transition in business ownership whether than be internally or externally through a trade sale.

conradfrancis

Some key factors to consider when preparing for a profitable succession:

3 major considerations  normally – Time / People /Finances

1. Begin succession planning well in advance. Don’t wait until the last minute. 
2. Understand and document what the business is looking to achieve and also how this interacts with what the business owners' goals are.
3.  Build strong foundations in your business and always look for improvement  

      You want to make your business as attractive as you can to any potential purchaser. That             doesn’t mean being ready to sell straight away, but you are constantly refining your                    offering, your operational processes and your client engagement to put you in the                      strongest position possible. You are also setting the business up to run well even when            you are not there. Having the right team in place with aligned values is a core pillar.

        4. Engage senior leaders in the process. 

         5 .Assess Current Talent: Identify potential successors within your organization. Assess            their readiness and potential for leadership roles

        6  Assess other Options and have a plan A, B and sometimes c  

        7 Invest in Professional Development: Provide training and development opportunities         to groom future leaders

        8 Consider Emotional Impact: Succession can be emotionally charged. Acknowledge feelings and provide support to those affected

Common Pitfalls to Avoid:

• Lack of preparation and not allowing enough time
• Poor communication
• Neglecting Succession Planning: Don’t postpone discussions about roles and successors. Waiting until a significant event can lead to confusion and conflict
• Keeping Succession Plans Secret: Transparency is crucial for a smooth transition.
• Trying to do it yourself when you don’t have experience …Not involving trusted professionals like advisers, lawyers, accountants or coaches
• Losing sight of impact on clients and the team
• Unrealistic expectations or having a 5 year plan that is always 5 years off…
• Cultural misalignment

A great point Rainier
Time is certainly one of the key constraints in any succession process
We always had our plan as preparing the business and team for a trade sale given our size . So the focus primarily was always on improving the business to make it more attractive for a potential purchaser, so our business was ready . In terms of being able to communicate when the potential transaction was starting off we had restrictions as one of the parties was a listed entity. This was problematic as there was only a small inside circle until it was announced . 
 We had a challenging 7 week period where a lot was happening but we could not say anything .

alex.burke  you are spot on in that you need to spend time understanding the various characteristics of any transaction. As we were selling the whole business we needed to ensure that cultural alignment was high as were passing over guardianship of 1400 plus clients and 30 plus team members... Given our strong connection with the purchaser over an 8 year period and involving some of their leadership team on our board by invitation we were well placed to assess this alignment. You dont always get this luxury in an external sale event as it is time pressured.  The more tangible factors were financial capacity, and operational capacity to integrate the business.