7 minute read
Succession Planning
WHEN IT COMES TO THE FUTURE OF THE COMPANY, FEW THINGS ARE MORE IMPORTANT THAN PLANNING FOR THE SUCCESSION OF ITS LEADERS
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LUKE FLATT
CHAIRMAN OF THE BOARD AB&T
Almost as soon as Luke Flatt joined AB&T Bank in 2009 as president and CEO, talks began about what the succession plan would be for him and that position. Now, as Flatt remains chairman of the board) and Perry Revell and Matt Rushton step into their new roles as CEO and as president, respectively, everyone, including shareholders and directors, can feel confident that the transition will be a smooth one.
Planning is important so that you’ve
got a path for the future,” said Flatt. “You’ve got an awareness of what the future potentially looks like, and so succession planning is no different. You assess the needs of the organization and what the organization’s expectations are long term and then you try to identify candidates who have the character traits and the ability that are necessary to take the organization where you want it to go. If you’re not doing that, then you’re really putting the organization at risk.”
Mack Bryson, the chairman of the Board of Directors of the Boys & Girls Clubs of Albany, understands the importance of succession planning. Just over a year ago, Marvin Laster, the CEO of the club since 2016, began talking to Bryson about stepping down from his position. But Bryson and Laster worked together, with Laster agreeing to give the board a year to find his successor and stay on once his successor was hired to train and mentor the new CEO.
easy, but we had a plan in place,” said Bryson.
Through the course of their search for a new CEO, Bryson and the board brought on Tim Wofford, who had experience working with a larger Boys & Girls Club in Alabama. Wofford is working with Laster, with plans for Laster to officially hand over the reins. “Because of Tim’s background with the club already, I fully expect him to fall right into that role and pick up right where Marvin left off because ... we can not have a drop off (in working with donors),” said Bryson.
MACK BRYSON,
CHAIRMAN OF THE BOARD BOYS & GIRLS CLUB
Eric Hooper, a tax attorney who works with clients on succession planning, sees the full gamut of what succession planning can look like for a business owner. “For most people, if they own their own business, their biggest asset is the business itself,” said Hooper. For my perspective, the idea of how we ERIC HOOPER transfer that business and what MOORE, CLARKE, DUVALL the transfer looks like is critical. AND RODGERS What I have found is there’s a lot of different things you have to consider. Every situation is unique. There is no situation that is exactly the same as the other.
“In a family-owned business, the considerations are even more important
because sometimes you have children or other family members who are involved in the business and then you have other children who are not. There’s always this tension of what’s fair and what’s equal and most people realize quickly that fair and equal aren’t always the same thing.”
Hooper said he always sits down with each of his clients to have an open and honest conversation with them and learn about what their goals and intentions are for the business. From there, he works on the logistics, like what the structure of the sale is going to look like and what kinds of tax consequences there may be for all those involved.
And while Hooper works with clients to develop a plan, he said it’s important to have one that’s flexible.
“You have some instances where you have a plan in place and you know we’re going to transition this business over time,” he said. “Then someone dies unexpectedly or someone becomes disabled unexpectedly or there’s a change in circumstances due to other unforeseen instances like a divorce, or someone wants to get out of the business or get into the business that we didn’t expect. That affects the succession plan as well. Sometimes you have to take those things into consideration, so it (the plan) evolves.”
Alex Willson, the chief operating officer for Sunnyland Farms, a business that was started by his grandparents, understands the importance of being prepared for unforeseen circumstances such as those described by attorney Hooper.
Willson himself didn’t expect to join the family business, but in ALEX WILLSON 2015, after college and living CHIEF OPERATING OFFICER away for 10 years, Willson and SUNNYLAND FARMS his family moved back to the Albany area to do just that. Now, Willson stressed the importance of having systems and processes in place that make succession planning and transition easier if something unexpected does happen.
“For anyone in any role, whether it’s part of the family and the ownership, any upper level management, a key manager, or even a worker, everybody is critical to what we do, so (we make) sure that we have processes and things documented,” said Willson. “I always use the example of 'If I get hit by a bus tomorrow, can someone come in and do my job immediately?' That’s how we look at it and that applies both for management, family transfer of responsibility, all the way down to someone packing one of our gift boxes. If that person just doesn’t come to work tomorrow for whatever reason, let’s make sure it’s replicable.”
And although Willson, whose father, Larry, is the company's
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president and CEO, is a success story of a family owned business continuing through yet another generation, Hooper has seen the reverse side of that coin with clients.
“The worst case scenario you have is sometimes you have a business where one generation doesn’t sell, they die owning the business, and the subsequent generation has no desire to participate in it,” said Hooper. “Usually their competitors recognize that and at that point what we’re really looking at is a fire sale and usually at a steep discount. That’s one of the things you want to avoid.”
And while Hooper stressed the importance of having a plan in place for the sake of the business owner, he also stressed the importance of continuity for the client or customer.
“I also think, to be frank with you, you have an obligation to have a good plan in place and that obligation runs to your customers, patients, or clients,” said Hooper. “To me, one of the worst things I see, and I do see this from time to time with professionals, is you have a professional who practices whatever his profession is up until the point he decides to retire. When you retire, where does that leave your clients or your patients or your customers if you just close shop and go? Frankly, I don’t think that’s very fair to a lot of them. I think you have an obligation, certainly not a legal one, but maybe a moral one to make certain that they are taken care of after you are no longer in practice.”
Hooper said anyone wanting or needing to work on their own succession plan should sit down and have a conversation with a few key people.
“I think it’s important to have a team of people who work with you on this,” he said. “From my perspective, when I say a team, the people I typically include in the team are your accountant or whoever your tax professional is, your attorney and typically you want an attorney that has expertise in this area of practice, … and then if you have a financial planner or someone who helps you plan personally your goals, it’s important to have them come into the meeting, too. The reason I say that is that each one of those people have an oversight over different aspects of your business life and so they have different insight and different values that they bring to the table.”
And again, Hooper stressed that a succession plan is often something that evolves and changes over time.
“It’s not something you just set and
forget it,” said Hooper. “It’s something you put in place, but I think you regularly review it and you tweak it to be certain that whatever the plan is, it reflects truly what your goals are.”
