Situation and Objectives:

• John is 61 years old, the President and majority shareholder of regional plumbing and heating company with $55 million in sales.
• He receives weekly unsolicited calls from business brokers and investment bankers with offers to buy or sell the company.
• He knows that he needs to plan for his eventual exit from the business and the calls are a constant reminder that he hasn't done anything yet.
• John is concerned that the callers' best interests may not be his.

Solution:

• Company owners, directors and key employees now think like a buyer...
• With a clear understanding of the company's value and the key drivers of the valuation, John and the other shareholders and Board of Directors concluded that although today was not the right time to take the company to market, it would be ready to go to market in the next 12-24 months.
• Restructuring the company saved significant taxes upon sale and facilitated a less complicated sale transaction.
• A "Stay Bonus Plan" was implemented to entice the company's key employees to stay through closing and add employment restrictions to prevent value dilution from a buyer's perspective.
• John was now armed with the tools to choose the right investment banker to sell the company on his schedule and on his terms.

Situation and Objectives:

• Sharon (53) and Tom (57) are husband and wife co-owners and officers of a specialty electronic component manufacturing company with $13 million in sales.
• Sharon and Tom both receive salaries from the company as well as rent for the lease of 2 business real estate properties, which they own personally. They also own 4 other parcels of valuable real estate: their primary residence, a vacation home and 2 local mixed use warehouse/office properties.
• They have 3 married grown children: Alex, Barb and Charlie. Alex is actively involved in the business. Barb just came back to work for the company after a several year stint with an unrelated business she co-founded with a couple college friends. Charlie works in the music industry.
• Treating all their children fairly was an important concern.

Solution:

• Sharon and Tom are now confident that they can safely leave the business while maintaining family harmony and financial security…
• The company created a strategic vision and process for executing it, allowing the family to work together to set future direction, and protect Sharon’s and Tom’s legacy and business value.
• By evaluating and developing the leadership and management skills of Alex and Barb (the children who are active in the business) and non-family key employees, the risk of failure was minimized and family stress reduced.
• Sharon and Tom were able to transfer the business to Alex and Barb for the “lowest defensible value”, assuring that taxes would be minimized.
• The process insured that Charlie (who was not active in the business) would be included through the use of non-business assets.

Situation and Objectives:

• Bill is 53 years old, the President and sole shareholder of a testing laboratory with $7 million in sales, with a healthy 25% historic EBIT.
• Although the business is successful by all financial measures, Bill is bored with the company and tired of running it.
• He has been restless, looking for other opportunities in and out of the business.
• He thinks the time has come to sell the company and move on to other interests.

Solution:

• Bill was transformed back into a happy motivated owner...
• Bill and his team worked through a collaborative process to develop a clear vision for the company and a process to manage the company strategically. All key people (not just Bill) are now engaged and invested in the future of the company.
• A new incentive compensation program was created for managers to share the future value, reduce turnover and sharpen their focus on achieving the strategic goals of the company. This includes reducing Bill's day-to-day role.
• Contingency plans were also put in place to reduce the risk that the value of the business would be diminished upon the death or disability of Bill.
• Bill is once again enjoying the business, building long-term value and rethinking his retirement.

Leadership succession planning is a process to create and manage the organization’s talent pipeline. A key (and often overlooked) part of leadership is developing the next generation of leaders.  This can address the looming retirement of key people or support rapid organizational growth.  Succession planning includes:

• Identifying the key positions in an organization, as well as the competencies and experience required for these positions.
• Cultivating a pipeline of high-potential talent from which to select new leadership.
• Conducting a talent inventory to understand the competencies and skills currently available within the organization.

This is a crucial process in every organization, but it is becoming increasing important as 72 million baby-boomer aged workers begin retiring over the next 10 years (U.S Census Bureau, 2009).  In addition, estimates show the potential shortfall of replacement workers may be as high as 30 million people.

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Succession planning is a process to create and manage the organization’s talent pipeline. A key (and often overlooked) part of leadership is developing the next generation of leaders.  Succession planning often includes:

• Identifying the key positions in an organization, as well as the competencies and experience required for these positions.
• Cultivating a pipeline of high-potential talent from which to select new leadership.
• Conducting a talent inventory to understand the competencies and skills currently available within the organization.

This is a crucial process in every organization, but it is becoming increasing important as 72 million baby-boomer aged workers begin retiring over the next 10 years (U.S Census Bureau, 2009).  In addition, estimates show the potential shortfall of replacement workers may be as high as 30 million people.

As a result, most businesses have key people with many years of knowledge and experience preparing to retire.  Unfortunately, qualified replacement employees will become increasingly hard to find. 

Planning for succession involves the selection and development of new leaders, as well as the transfer of crucial knowledge and experience.  Organizations must also develop a culture of leadership that encourages leadership everywhere and gets the best from every employee.

Our leadership succession process is backed by over 40 years of field experience and the latest leadership psychology research. 

The figure shown here depicts our family leadership succession process. U.S Census Bureau. (2009). US Census Bureau Press Releases. Retrieved from http://www.census.gov/population/age/publications/files/2006babyboomers.pdf