Family business succession
Key considerations for transitioning to the next generation
I
Doug Tyce, CPA, CA MNP
f you own and operate a family
succession. First, do your children have
ity in the company. The best thing for the
business, part of your long-term
the aptitude, knowledge and skills re-
business and the family is to match your
strategy is to determine who will
quired to successfully lead the company?
children to the roles where they are best
run the business when you decide
Before beginning any succession conver-
suited to succeed.
to step back from the day-to-day de-
sations, consider what the business needs
mands. Transitioning the business to your
and what criteria you would use to pick
children may be a very attractive option
a successor if none of the individuals in-
for a whole host of reasons – both person-
volved were family. Then you can objec-
al and financial. But keeping the business
tively evaluate your children to determine
in the family also adds complexity as you seek to balance the overlapping roles and expectations of family members. To get you started, here are a few key questions
who is best qualified, and/or identify any gaps in their leadership and management abilities that need to be addressed. After you’ve identified a potential suc-
to consider.
cessor, you need to address the next big
What is your timeline?
for their future? You can’t force succession
question: do they share the same vision
What about children not actively involved in the business?
It’s equally important to talk openly with children who are not involved in the business. What are their goals? Were do they fit in? How might they be impacted by decisions around the family business? Again, the key here is to seek fairness, not equality. In many cases, this can be achieved by balancing your estate plan, such as providing those children with a larger share of your non-business inheritance such
How much longer do you want to work
planning on your children, and not every
in the business before retiring or stepping
child wants to take over the family busi-
back? The earlier you start planning, the
ness. If you’ve never asked, make it a pri-
more options you have available. It’s also
ority to start the conversation. If it turns
important to consider how you see your-
out none of your children are interested,
self transitioning from the business. In
it’s good to know this up front so you can
other words, what does “retirement” look
pursue a different exit strategy, such as
long-term success of your family business
like to you? Do you see yourself making a
selling the business to a key employee or
and there are no short cuts. The best way
a third party.
to secure the future of both your business
clean break and never working again, or
as property, RRSPs, and savings. Dealing with this up front is critical to maintain family unity and avoid conflicts down the road. Your succession plan is a key part of the
On the other hand, if you’re fortunate
and your family is to start early, strive for
to have multiple children active in the
open and honest communication, and
want to know this.
business, you’ll need to determine who is
seek fairness for all parties.
best qualified to lead the company, and
Doug Tyce, CPA, CA is a partner with
Who will take over?
gradually reducing your hours and role in the business? Your eventual successors will
who may be better suited to other roles.
MNP and lead’s the firm’s Real Estate and
In my 20-plus years as a business advi-
As a business-owner parent, you need to
Construction practice on Vancouver Island.
sor, I’ve found there are two major causes
treat your children fairly, but this does not
For more information, contact Doug at
of struggle and failure when it comes to
mean they all deserve equal responsibil-
250-734-4368 or doug.tyce@mnp.ca. n
40 Vancouver Island Construction Association
