The primary reasons business successions fail

Reasons Succession Fails Image by Decision Associates

From owner and successor issues to planning and business challenges, Decision Associates has identified the primary reasons business successions fail. Our experienced succession planning consultants help you avoid these and achieve a successful succession.

 Owner Issues

  1. Owner has truly unique intellectual property; without them, there is no business.
  2. Owners place the wrong family members and employees in the wrong slots.
  3. Owner slows down and business gets stale.
  4. Owner has a wrong belief in the business’ value.
  5. Owners start too late or do not get started at all.
  6. Business structure and culture are built around the owner, but the incoming successors are very different in their investment or management styles.
  7. Owner micro-manages, weakening the organization and successors. The owner does not let go and allow the successors to step up and learn.
  8. No provision for sudden incapacitation or death; the organization and the family are set adrift.

Successor Issues

  1. Children or employees are not qualified to own and manage the business; they lack experience and are not entrepreneurs or business people.
  2. Children in the business do not want to buy the business.
  3. Family members or employee-buyers do not get along.
  4. Successors are not able to earn the respect, confidence, and faith of key employees and stakeholders.
  5. Successors are not able to agree on responsibilities, accountability, compensation.
  6. Management team is the same vintage as the owner.
  7. Lack of development, coaching, and mentoring programs for the successors.

Planning Issues

  1. Lack of a “backup” plan to preserve the business should the transition to successors fail.
  2. Inadequate partner survivorship plan.
  3. Estate plan is wrong or not done at all.
  4. Failure to create a “bridge management” structure.
  5. Lack of a strategic planning process that integrates the successors.

Business Issues

  1. Business is not attractive for sale for any number of reasons: it is in decline or the industry is in decline; there was lack of ongoing investment; there is lack of customer diversification
  2. Lack of planning and preparation for financing arrangements to position the successors for financing, i.e., the successors are not bankable.
  3. Owner cannot afford to be “the bank.”

Learn more about Decision Associates’ succession planning services:

Our Consultants

Elizabeth Cipola Executive Consultant at Decision Associates
Elizabeth Cipolla
Terry Cascioli Executive Consultant at Decision Associates
Terry Cascioli
Mike Smiley Executive Consultant at Decision Associates
Mike Smiley
Amanda Kochirka
Aaron Phillip Principal/Executive Consultant at Decision Associates
Aaron Phillips

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