Our experience at DSBL has been that successful transition planning most often requires the guidance and support of a trusted professional advisor.
We remind business owners that transition planning is a process, not an event. We support them as they re-examine their business with a critical eye – the eye of a buyer.
The process requires input from various stakeholders linked to family enterprises – family members, key staff, management, and trusted advisors.
It is not enough to create a succession plan and an estate plan that is tax efficient. It needs to start by being people efficient. There is a good reason why more than 70 per cent of family-owned businesses do not make it to the next generation.
Each family enterprise is unique and has its own vision and family dynamics. Each family member’s perspective deserves acknowledgment and respect. “Silence is the great destroyer of wealth in a family business” (Tom Deans). We ask owners to share the history, challenges, and opportunities of their business. We also give family members the opportunity, in one-on-one confidential conversations, to share their perspectives, issues and objectives.
We develop a relationship built on trust. The information shared with us helps shape the context of discussions in facilitated forums that we lead with family members. The insights gained in the information gathering process provide valuable tools to focus and manage the dialogue. It is collaborative, and invites participation among other trusted advisors, such as accountants, insurance advisors, valuators, and wealth advisors.
Our process has two objectives. The first is to create an ownership transition plan and an estate plan that implements the founder’s and the family’s goals and, to the greatest extent possible, has the endorsement of each of the members of the family. The second is for the owner to look at the business through the lens of a buyer and answer the question: “Are you running your business as if it’s for sale?”. That change in perspective opens the door to identifying the structures and approaches that are needed to professionalize the business.
The final step is to give these objectives expression in shareholder and estate planning arrangements and corporate policies that are fair and transparent and that look to marry family objectives with best business practices and tax-smart strategies.