July 16, 2018

Ready, Fire, Aim: Missing the Mark on Your Succession Plan

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My uncle has a choice to make; he like many other Baby Boomers owns a closely held business (CHB) and does not have a succession plan. It’s not that my uncle hasn’t thought about this transition but the magnitude of the process can be daunting. The family business is an independent insurance agency founded by my Grandfather in 1954. In the early 1980’s, my uncle began to work at the agency and after a few years slowly began the process of buying out my Grandfather. Fast forward to 2018 and another transition needs to happen.

Many CHB owners nearing retirement plan on selling or exiting their business to fund a portion or all of their retirement. This upcoming economic shift is in its early stages and is set to transform the business landscape. The transitioning CHB owner and prospective successor need to consider three key areas to meet their intended marks and achieve optimum results. Elliott Davis CHB advisors assist both incoming and outgoing parties through the succession planning process focusing on three key areas: communication, planning and execution.


There are numerous CHB stakeholders: owners, employees, clients, community to name a few. Proper communication begins with unified and reasoned messaging from the key decision makers. The succession plan can break down when the messaging being given to various stakeholders is not properly understood. Confusion between parties can lead to instability, which leads to poor results. We guide the CHB transition with a structured roadmap for success and assist with goal setting and actionable results.


Often a closely held business owners’ primary financial asset is the company’s equity. Monetizing this equity in some form or fashion requires planning. For instance, say the CHB owner’s perception of the value of their business is higher than the market value. This value gap can be planned for, generally this is a 2 – 5 year process to work together to help enhance value. Transitioning owners need time to clean up financials, change management styles, reduce buyer risk and optimize performance. Allowing proper planning time can address these issues and many more.


With the stakeholders previously mentioned, CHB owners have many demands of their time. The paramount time consideration is operating their company. Should a transitioning owner’s time become overwhelmed by managing through a succession plan, often times the company coasts. And coasting breeds complacency. The complacency can complicate the succession plan and can jeopardize the deal actually closing. All the planning and great intentions can become lost at the end if the business results falter due to the transition.

We Can Help

Elliott Davis CHB advisors can help owners throughout the full extent of this process. We can assist with messaging and the alignment of the vision with the operations. Our team can identify areas to enhance value and guide the succession plan through the final stages to increase probability of closing. We welcome the opportunity to have a conversation with you.

Getting back to my uncle, fortunately he is very early in the succession planning process so he can effectively establish his messaging and communication, identify areas of improvement and work with proven advisors to ensure a smooth transition process and hit the mark.

The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.

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