Finding the Silver Lining in Succession
When people talk about succession, they tend to focus on issues such as valuations, buyout amounts, deferred compensation, partnership agreements, the development of new leaders and client retention. Not much is said about the emotional side of succession. Let’s face it: As with any transition, succession hurts. Owners struggle with letting go of the business and the relationships they’ve built, and the new owners struggle to gain a foothold in their new roles.
Even in a well-planned and executed succession, there are a number of events and circumstances that cause some level of discomfort. Succession tests the personal and leadership strength of the outgoing owner and, when not recognized, can deflate the excitement of the incoming owners and even threaten their future success. If we acknowledge this side up front, we’ll be better able to set ourselves on a smooth and successful journey. So, what tough challenges should we prepare for on the road to succession?
Confident leadership is a sign of a healthy firm. That’s what you have to remember as incoming owners make changes and set a new direction. Letting go and allowing the new leaders to take the reins definitely requires a measure of personal fortitude. As they initiate contact with clients, the outgoing owner may feel excluded. Once again, it’s best to recognize those feelings before they create conflicts or misunderstandings. It’s also useful to remember the vibrant future awaiting the firm you built and on the financial rewards that future might offer to you and the new owners.
Face your fear and uncertainly. Even though you knew retirement was coming, you will still find yourself faced with questions such as: What am I going to do on the first day when I no longer have the office to go to? How will I feel about no longer having a regular income stream? What will be my mission in life if I am no longer making a difference with clients? What will each day be like without all my colleagues and the firm’s camaraderie? These thoughts are natural. Allow yourself some time to live with them and to find your own answers. As part of that process, instead of trying to hang on to involvement in the firm, step away and discover the new paths that await you.
Be proud of your accomplishments. Don’t allow uncomfortable feeling to stand in the way of a productive transition or discourage potential new leaders or merger partners because of an unwillingness to let go. Look in the mirror, say “ouch,” and move on to the next phase of the relationship, one that will work for you and for the firm. Instead of focusing on the pain, think about the gain. There are financial rewards to turning over a prosperous firm to new leaders who are well positioned to maintain its success. There are also new activities, relationships, and passions to explore outside of the firm. If you embrace the positive side of succession, then seeing outstanding firm team members step into leadership, continue to grow and lead fully-transitioned clients to the next levels of success with the firm can be a tremendous source of joy and pride.
I’m a true succession expert, having helped lay the groundwork for new leadership during my transition from my own practice years ago. Now, I am doing the same as I prepare to retire from the AICPA. If you haven’t faced the challenges of succession planning, I urge you to do your research. Visit the AICPA Private Companies Practice Section Succession Planning Resource Center, consider attending the Succession Planning Summit next week or sign up for the Succession Planning webcast series for Sole Owners and Small Firms or Medium and Large Firms. You’ll get insights from owners who have been through the process and gain tips for creating your own succession plan.
What’s holding you back from planning your succession?
James C. Metzler, CPA, Vice President – Small Firm Interests, American Institute of CPAs.