90
per cent will never
reach the third
generation — despite
a desire on the part
of owners to see
the business live on
within the family.
Lynch. “Succession planning is actually a process. It takes years
of planning.”
At Fitzpatrick & Company, that planning began from the out-
set. “We sat down and identified the 10/10/10 — the 10-minute,
the 10-month and the 10-year plan,” said Fitzpatrick.
The first element, he noted, looked at growing the business,
the second at transferring knowledge, and the third included setting a date for exit and entrance of the senior partners.
The focus, stressed Klar, is about the impact of succes-
sion—and the successor—on the business. “It’s all about
preserving and building net worth. It can take many weeks or
months to undo many years of successful business building.”
Picking the right successor requires concentrating on a few key
areas. First, there is the issue of capability. The optimal successor,
noted Lynch, “needs to be committed to the growth of the business
and are leading by example. They are not being presumptuous just
because they have the same last name as the owner.”
Proficiency is an important factor, noted Fitzpatrick. “The
person taking over has to be competent. They don’t necessarily
have to have taken all the courses.”
They should also have some experience, and experiences,
under their belt, he added. “Try to ensure the successor, if pos-
sible, has been out in the world and is ready to settle down.”
What the successor does need to share with the owner is a
similar vision. “There should be a common set of values that
everyone is aligned to,” Lynch said. “There has to be a win-win
for the parents and the children.”
The need for successful succession planning is evident on two
fronts: past and present. According to the Family Firm Institute,
Inc., a Boston-based membership organization for those advising
in the family business field, 70 per cent of family-owned busi-
nesses will not survive to the second generation. Ninety per cent
will never reach the third generation—despite a desire on the
part of owners to see the business live on within the family. END
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