Privately owned businesses are often a way to create a lasting legacy and build generational wealth. These businesses are tied together tightly with both loyalty and keen business sense. Having worked with some clients for more than eight decades, Hinckley Allen’s Privately Held & Family Owned Businesses team has the experience and insight to lead your business into its next chapter.

Here are three tips that can start you down the right road toward succession planning.

1. Start the Process Early: Savvy companies consider succession planning at the formation of their businesses. Succession planning requires forward thinking and consideration of factors that cannot be predicted. The next generation of leadership needs to both embrace the history of the company, but also commit to advancing it into the future. Waiting too long to address succession planning can create issues, especially if a company becomes very valuable. Once a company has significant value, transfers of capital become more difficult, and individuals may not have sufficient personal means to buy into the company. Furthermore, an unplanned transition as a result of death or disability, often threatens the survival of the business. Planning for the future while healthy and fully engaged in the business gives the current leadership the opportunity to shape the future and build a lasting legacy.
2. Choose Your Team Wisely: Sustainable leadership may be found within an existing team, but an honest assessment of existing strengths and weaknesses is essential for sound succession planning. While preserving institutional knowledge and close familial or friendship ties can be a helpful asset when forecasting for the future, the different experiences of outside hires can rejuvenate a closely held business by offering a new perspective. A wise leader will look for new team members who can offer different perspectives but who also embrace the core culture of the company.
3. Ask the Hard Questions: Succession planning usually takes place over a series of delicate conversations. The successors need to have the right level of professionalism for the role. Sometimes the next person in line may not be ready yet, and difficult conversations cannot be avoided. Companies need to be open to bringing in consultants and hiring additional layers either internally or externally in order to create a long-term plan. The best succession plans create a shared sense of commitment to the organization and have the talent to execute future objectives.

At Hinckley Allen, we have decades of experience helping privately held and family owned businesses navigate the challenges and opportunities that come with succession planning. As outside counsel and advisors, we identify gaps, introduce new ideas, and work closely with our clients so they can achieve the growth they are seeking.