Generational transition: confronting clients' fears and assumptions.

• Author: Rodenberg, Carolyn R.

How to break down the barriers to effective succession planning

"I don't have plans for five years from now--even a year from now! When I come into the plant each morning, I figure out the plan for that day." This was the response of an active 65-year old owner of a multimillion-dollar business in the Midwest when asked by a trained facilitator about planning for the future of his business. For several years, his 40-year old daughter and 42-year old son, both in the business for more than 20 years, and the company's long-time CPA were waiting for the owner-manager to talk about transitions. The family trusts and estate plan were in place, but the "who and how" of future business operations was a topic that was avoided.

The businessman's s children and CPA did not press the subject because they knew it would be a difficult and emotion-charged conversation involving personal and family issues. They were avoiding the conflict, which is common in family or closely held businesses, but the fear of conflict often prevents planning. Avoiding transitional or succession planning, however, is an almost certain path to delayed conflict.

The baby step

Since the fear of conflict leads to silence on the part of family members, who is going to take the difficult first step? Although the CPA may also fear causing conflict by broaching the subject of succession planning, it is his or her responsibility, as the company's primary business consultant, to overcome such fears and encourage clients to begin the planning process. Such an approach should be objective, with the focus on separating the past from the present and pointing the business toward the future.

CPAs are well aware of the potentially devastating impact of a lack of planning. It is a "live volcano"--a disaster waiting to happen. An unexpected death or disability often results in turning a business's management over to a relative or employee whose inexperience and indecision can be debilitating to the business.

Because the CPA usually has a close, trusted relationship with the client, she or he is in an excellent position to advance the entire planning process from the initial conversations through the plan preparation. To be effective, however, the CPA may need to be trained in facilitation first. Another option is to "partner" with a professional facilitator or mediator, with the CPA sifting on the "same side of the table" as the clients and advising them.

Looking to the future requires that...