FAMILY-OWNED BUSINESSES:
For family owned businesses succession
planning and ownership transition structuring are critical to the future of the business and to the preservation, growth and
effective use of family business assets.
Lack
of an effective and sustainable succession plan and ownership transition structuring in a family-owned business leads, at
best, to uncertainty and costly loss of momentum. In the worst, more frequent scenario, it leads to squabbling and demise
of the enterprise. (See Family-Owned Businesses section)
While many founders “know” that the next generation wants to lead the enterprise someday, the next generation
may, in fact, have other career aspirations. Unfortunately, when the founder leaves the business
or is gone, each member of the next generation can finally pursue his or her real interests and the family business
languishes and is eventually sold or shut down, ending the founder's legacy.
Establishing trust funds and insurance plans is a frequent path for ownership and control succession .
Unfortunately, these structures bring disadvantages that can completely derail the founder’s original goals. For example, since the benefits are essentially guaranteed, trust funds encourage a "coupon clipping"
mentality in the next generation, which can destroy commitment to the business.
To avoid this critical
downside of trust funds, well-planned structures, leadership programs and performance motivational plans should
be in place prior to or at least concurrent with the implementation of trust funds.
Spinnaker develops
and helps its clients to implement succession and ownership transition plans that are much more effective than trust funds
and insurance policies alone in cascading the family business through successive generations while preserving the family
legacy and protecting and growing family business assets.
PUBLIC CORPORATIONS:
Succession planning, to ensure seamless succession of top leaders and continuous commitment
to and implementation of corporate strategies, is an important responsibility of each senior executive and board of directors.
While every corporate leader likes to think
that he or she has a viable succession plan, in fact not many accomplish this and only a rare few accomplish it well.
The day-to-day operational priorities generally capture full attention and, despite the best intentions, leaders seldom
provide for their succession. And, of course, who likes to think about being replaced?
Succession planning cascaded to and through the middle management levels provides
continuous implementation of corporate strategies. It also helps ensure coherent and cohesive career development
steps, which are important to motivating and retaining middle managers, prospective middle managers and employees.
Spinnaker can help you with creative,
effective succession planning, succession structures and career development programs for your family-owned business or public
corporation.
