t’s a tragic tale that plays out in many businesses across the country. The owner of the company believes he’s finally ready to trigger his succession plan and retire. So he names his daughter as his successor, enjoys his retirement party and departs for his vacation home.
For six months of the year, the now-former business owner lives at that vacation home while his daughter toils away at establishing control of the company. Although her father has given the daughter stock in the company, he still retains the majority vote.
And whether on vacation or at his primary residence, the former owner insists on calling into work almost every day and being kept informed via email of everything going on. When tough decisions are required, top managers still look to him for final confirmation. Every so often, he even pays a visit to the office with much fanfare, undermining the authority he has seemingly given his daughter to oversee the business.
After a year or two of this, the true consequences start to become clear. The former owner’s relationship with his daughter has deteriorated severely — mainly because of business disagreements. And, without a clear strategic direction, the company itself is floundering and falling behind the competition.
The lesson of this sad story is fairly clear: Once your retirement date arrives, stick to it. Doing so means getting out — all the way out, at least in terms of decision-making.
Remember, you can always stay available as a consultant. Just make sure not to undermine your successor’s authority. Making a clean break is usually the most effective way to ensure a succession plan succeeds.
If you’re nearing retirement, let us help you go over the details of your succession plan. We can help with both the financial aspects and the strategic moves that will keep your company strong.
For more information on this topic, or to learn how Baker Tilly specialists can help, contact our team.