1. Succession Planning – What Is It?
    When you mention the word ‘succession’ the common reaction is to think of ‘retirement’. Whether it is the CEO of a public company or in the private company arena, the connection is immediate and usually without exception.
    For private companies, succession connects with the founder and/or owner retiring and selling out to a third party or passing over control to a family member. Whilst these definitions may not be incorrect, they do not accurately reflect what should be the real focus of succession for private companies.
    This typical response to succession is one of the major barriers to effective succession planning and is often the first impediment to be overcome.
    The eventual retirement of a founder and/or owner may well be an outcome of a succession process
    but it is certainly not its purpose. Succession is the process of ensuring the continuity of a business beyond its current management. This is achieved through identifying and understanding the capital value drivers of the business, the elements that allow it to compete effectively in its markets, and growing and investing in those drivers.
    A focus on capital value drivers allows not only for effective succession, but also supports and allows a compounding of the business’ capital value over its life.
    We think of succession planning as a process of evolution – Business Evolution. Enabling the compounding of wealth from generation to generation while ensuring family unity, individual growth and a sense of contribution, this is the essence of succession planning, this is Business Evolution. It is a process that should commence the day the business is born and continue for its entire life.

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  2. Principle 1: Succession Is Not Retirement
    The first principle is about getting your head in the right place. If you believe succession is about growing old, stepping down, surrendering, giving up, not being able to contribute anymore or anything along these lines, then you have lost the succession process before you have even commenced. A negative belief about what succession represents will not allow you to engage in the process in the manner that is required to deliver the success you are ultimately seeking to achieve.

    You and everyone who will support you in this process must see succession as being about evolution – Business Evolution. It is about growth, opportunity and building the future while you are there today. It is about the incumbent team taking responsibility for future proofing the capital value of the business by ensuring that the next team is capable, competent, experienced and will be able to take the business to the next level. Succession is the legacy you leave.

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  3. Principle 2: Start With Readiness
    Before you commence any serious journey, preparation is a must and the journey of succession is no different. The incumbent team and the next generation team must get ready for the succession process as it takes time, commitment and motivation. For any critical change management program, a clear start is important. The succession process needs a clear and committed start and not something that drifts in and out as time permits.

    Establish a process, formalise it, timetable it, monitor it and commit the necessary resources. Discuss the process openly, identify possible limitations and barriers before commencement and remove as many as you can.

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  4. Principle 3: Set Your Goals Before The Journey
    The importance of establishing and setting your goals before you commence your journey cannot be overemphasised. Write down the outcomes/goals you want to achieve from the succession process. They must be clear and measurable but, more importantly, they must be compelling. If what you are seeking from the succession process is not energising enough to engage everyone supporting the process then you will not devote the time or resources required and will not have the energy to get over the inevitable challenges that will arise.

    The goals that you establish before you commence will instruct and guide everyone participating in the process. They will:
    • Provide the motivation required
    • Act as the lighthouse to guide your direction
    • Provide a basis for agreement of intent and expectations by participants
    • Allow the development of a clear path for delivery of the succession process
    • Serve as a benchmark against which to measure the success of the process
    • Provide a basis on which to focus external advisors on the outcomes you are seeking.

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  5. Principle 4: Harmony Is A Must
    Creating, sustaining and enhancing harmony through the succession process is a must.

    Harmony will support and deliver on your goals and will weaken and remove any barriers that might exist in achieving the initial goals you have set. Harmony with everyone involved in the process is what you must seek to achieve, but harmony does not mean conceding or being weak. Harmony requires that you communicate well and openly, that you listen (yes, that means really listening and appreciating others’ positions), that you actively invite contribution and provide active updates of progress.

    It also means that you keep an absolute focus on achieving the initial goals set and on business continuity and ongoing jobs. Harmony is about integrity and keeping true to the outcomes set and, if this requires that one of the participants will not achieve their preferred outcome, then harmony requires that you communicate this clearly, explain why and uphold this position.

    In engaging with family and other persons involved in succession, you must recognise that they are seeking certainty about the process and their future. They wish to feel a sense of contribution and a positive outcome where there are opportunities for individual growth.

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Pitcher Partners - Eight Guiding Principles of Family Business Succession

Richard Shrapnel

The Journey of Succession and orienteering your way to a successful conclusion can be very challenging. This channel provides an outline of the Eight Guiding Principles to achieving the right outcome for you.

When you mention the word ‘succession’…


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The Journey of Succession and orienteering your way to a successful conclusion can be very challenging. This channel provides an outline of the Eight Guiding Principles to achieving the right outcome for you.

When you mention the word ‘succession’ the common reaction is to think of ‘retirement’. Whether it is the CEO of a public company or in the private company arena, the connection is immediate and usually without exception.
For private companies, succession connects with the founder and/or owner retiring and selling out to a third party or passing over control to a family member. Whilst these definitions may not be incorrect, they do not accurately reflect what should be the real focus of succession for private companies.

This typical response to succession is one of the major barriers to effective succession planning and is often the first impediment to be overcome.

The eventual retirement of a founder and/or owner may well be an outcome of a succession process
but it is certainly not its purpose. Succession is the process of ensuring the continuity of a business beyond its current management. This is achieved through identifying and understanding the capital value drivers of the business, the elements that allow it to compete effectively in its markets, and growing and investing in those drivers.
A focus on capital value drivers allows not only for effective succession, but also supports and allows a compounding of the business’ capital value over its life.

We think of succession planning as a process of evolution – Business Evolution. Enabling the compounding of wealth from generation to generation while ensuring family unity, individual growth and a sense of contribution, this is the essence of succession planning, this is Business Evolution. It is a process that should commence the day the business is born and continue for its entire life.

Succession planning is a key concern for anyone who has founded, owns or has an equity interest in businesses trading under a private company structure or public company where they continue to hold a significant controlling interest. Your wealth is materially impacted by your ability to realise and/or transfer that interest to a third party or family members. If you own a minor shareholding in a public listed company realising or transferring its value is relatively easy, however with privately owned businesses or a significant controlling interest in listed companies, realising and transferring value is a very different process.
Succession planning starts the day you commence your business and continues until the business no longer exists or you release your interest.

Succession planning is important for family businesses, small businesses, medium and large businesses, closely held businesses, privately owned businesses and a significant controlling interest in publicly listed businesses. However you describe your business, succession is fundamental in determining the ‘capital value, worth, market price’ of your business, and therefore your and your family’s wealth.

In any economy, these ‘privately owned’ business interests collectively represent ‘big business’ and therefore succession is a process that should be taken seriously.

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