Succession planning working session from above

The personnel perspectives of succession planning

Authored by Laura Cataldo

The topic of succession planning typically triggers a discussion about transfer of ownership. There are many ownership options that can be considered to meet the needs of the exiting owner and ensure the company’s financial sustainability in the future.

Ideally, ownership succession aligns the desired exit plan with the business value and cash flow while minimizing taxes. Personal assets and the definition of financial security are unique to each exiting owner, so an ownership succession plan should be built to meet both the current and future needs of the individual and the business. The business perspective in this process is critical because an effective succession plan needs to provide the appropriate structure and resources to reward and retain the leadership team.

Regardless of how the sale, merger, or acquisition allows the owner to exit, management succession must also be addressed. Employees are a company’s greatest asset. They are responsible for business results and competitive advantage. An effective succession plan focuses both on the financial transaction of ownership and the personnel issues of management succession in which you define the competencies and capabilities necessary for success, assess leadership potential, and focus on developing and retaining key personnel.

This article explains why effective management succession does not begin when an owner plans to exit the business but when he or she proactively focuses on developing and retaining key personnel that demonstrate the competencies, capabilities, and potential necessary for future success.

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This article was originally published in Construction Accounting and Taxation (March/April 2019)

For more information on this topic, or to learn how Baker Tilly specialists can help, contact our team.

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