In a recent meeting with a successful third-generation entrepreneur, my partner and I asked what his plan was for succession to the next generation of ownership. The response was immediate and decisive:
“Well, at a recent board meeting, we passed a resolution making me immortal. So no succession plan needed!”
He, of course, made this comment in jest, and went on to document the strong organizational structure he and his partners have created, and mechanisms in place in order to prepare the organization for a transition of ownership (whenever it may become necessary or a reality). But the idea stuck with us and led us into a rather interesting discussion on the apparent lack of urgency amongst entrepreneurs in dealing with this particular topic.
Indeed, it seems that many entrepreneurs must believe this (ie. their immortality) to be the case – otherwise there’s no logical explanation for their unwillingness to broach the subject of “what happens after I’m gone?”. Over the years, many business owners have remarked to us (in some variation) that their intention is to work in the business for their entire life (“They’ll have to carry me out of here in a box” one such client suggested). Our job certainly isn’t to force anyone into retirement, and if a business owner wants to work in the business for the rest of their life then that’s their prerogative. The question, from our perspective, though, is what happens AFTER the owner is carried out in that box?
A responsible business owner recognizes the need to prepare the business for the time when the new owner(s) will be in place (whether the business is sold by the owner, or if the ownership changes hands after the owner’s passing). The issues will not simply “go away” if the owner ignores them, and leaving it for the next generation to deal with is usually ill-fated.
Sadly, no board is capable of appointing an “Immortal CEO” – despite the obvious continuity advantages this would create. So unless modern science makes some significant leaps forward in the next few years, more and more business owners are going to find themselves in need of a plan to manage the transition of ownership or sale of the business.