How do you involve external advisors or board members in your succession process?

Specify Assistance Type: Clearly define whether you need legal, financial, tax, governance, strategy, or conflict resolution help. Set Clear Goals: Outline what you aim to achieve with external expertise to ensure alignment and effectiveness. Advisor Selection: Choose advisors or board members based on their expertise relative to your specific needs—lawyers, accountants, consultants, etc. Evaluate Needs for Training: Determine if there's a need for mentoring or coaching, especially for potential successors in your business. Match Expertise with Needs: Align the specific skills and experience of professionals with the challenges and opportunities your business faces.

The starting process for succession planning can feel overwhelming - my advice is to start by having an open and honest conversation with family members. A lot of times the current generation starts mapping out a plan before they have even started to engage the next gen, this can lead to Next Gens feeling like something is being pushed on to them rather then it being a collaborative processes. Communicate, communicate, communicate. Spend time talking about values, what does legacy mean collectively and individually, etc. Then start mapping out what help you need. I'd also suggest that when you start looking at different advisors think about creating an ecosystem where various advisors can work collaboratively instead of in silos.

Whether already in place, time to review and update, or needing to establish, sound governance for any family business has three pillars: 1. A strong family committed to continuing the legacy. The need for unity and a shared vision is essential. 2. Creation of governing documents. Many dread this process, but it can be quite enlightening and is an effective path to establishing a structure for governance. 3. Transparent process for making decisions. This will be strengthened through practiced, regular communication that allows for all voices to be heard.

Look at the current leadership team and identify any skill gaps that need to be filled. What expertise is lacking? For example, you might need someone with deep financial knowledge, strategic planning skills, or experience in a particular industry. Define what you want to achieve with the succession process. Are you looking to ensure a smooth transition, maintain business continuity, or drive future growth? Clear objectives will guide your selection of advisors and board members. Decide whether you need a one-time consultation or ongoing involvement. Some businesses benefit from long-term advisory roles, while others might only need short-term guidance for the transition period.

A sucessão é um tema de natureza multidisciplinar. Mais importante do que o tamanho da empresa é o número de pessoas envolvidas no processo, sejam elas familiares ou não. À medida que novos interessados entram em cena, as relações interpessoais se tornam exponencialmente mais complexas. Por isso, cada caso exige uma solução específica e personalizada. O primeiro passo, sem dúvida, é ter uma visão clara do cenário atual, das partes interessadas e dos objetivos a serem alcançados. A partir dessa compreensão, será possível determinar com mais precisão se a sucessão pode ser conduzida internamente ou se será necessário contratar conselheiros externos.

Choose individuals with proven expertise in areas critical to your succession process. This could include legal, financial, operational, or industry-specific knowledge. Experienced advisors bring valuable insights and best practices. Look at their past involvement in similar succession processes. A track record of successful transitions indicates they know what works and can anticipate potential pitfalls. It’s important that external advisors and board members align with your company’s values and culture. They should respect the family’s legacy while bringing in fresh perspectives. A good cultural fit ensures smoother collaboration and better decision-making. Also, seek recommendations.

Relevant Expertise: Target professionals with direct experience and credentials in your industry and specific issues like succession. Values Alignment: Choose advisors who share your business vision, values, and culture to ensure a cohesive relationship. Communication Skills: Opt for individuals adept at communicating effectively with both you and your family. Utilize Referrals: Leverage recommendations from peers and existing advisors to find trustworthy candidates. Conduct Interviews: Interview several candidates and check their references to evaluate their compatibility and expertise. Careful Selection: Make your final decision based on how well each candidate can contribute to achieving your long-term business goals.

One of the important factor to consider when choosing board members/advisor is the trust and mutual respect between the board, family owners, and business leaders. The board members should have gained the confidence of the family, otherwise their role may not give the desired results. The family leaders should view them as a source of industry experience and expertise who can probe their thought processes while providing guidance on governance.

Scope of Work: Define specific duties and responsibilities for each advisor or board member. Deliverables: Specify expected outcomes, reports, and deadlines. Fees and Payment: Agree on fee structures and payment schedules. Confidentiality: Enforce strict confidentiality agreements to protect sensitive information. Accountability: Set clear performance criteria for accountability. Communication Protocols: Determine communication frequency and methods. Conflict Resolution: Outline procedures for resolving disagreements. Formal Agreement: Document all terms in a written contract or letter of engagement.

Clearly outline what each advisor or board member is responsible for. Are they providing strategic guidance, operational advice, or mediation in family matters? Specific responsibilities prevent overlaps and ensure accountability. Define what you expect to achieve with their involvement. Whether it’s developing a succession plan, mentoring the next generation, or facilitating family meetings, clear objectives help keep everyone focused and aligned. Discuss and agree on the time commitment required. Put all roles, responsibilities, and expectations in writing. This formalizes the arrangement and provides a reference point to resolve any misunderstandings or disputes.

Having an advisor who plays the role of team quarterback can make your life as owner a lot easier. You can set these expectations with them and they can help you vet, select and manage the people you've selected to help you manage this process. You have to keep running and growing your business while preparing to exit. Bring in a specialist to help you do that well!

Provide Information: Share essential data and background details to fully inform advisors or board members. Value Input: Seek and consider their insights and recommendations to utilize their expertise. Regular Meetings: Involve them in key meetings and decision-making processes for active contribution. Respect Opinions: Value their perspectives and opinions for diversified insights. Assign Responsibilities: Delegate tasks or projects that match their expertise. Stakeholder Access: Allow interaction with key stakeholders like family, management, and staff. Encourage Participation: Ensure they play a significant role in the succession planning process.

Don't keep your advisors and professional service providers siloed. They are all responsible for helping you through this process. They are expected to work together to help you be successful. They should provide the greatest value wen working together. With a good quarterback, your meetings, information seeking/sharing, collaboration, analysis and decision making with advisors can be coordinated and aligned to your desired end result.

Encourage open and transparent communication between the advisors, board members, and family members. This builds trust and ensures that everyone’s perspectives and concerns are heard. Early involvement allows them to understand the business dynamics, build relationships, and provide more informed guidance. Promote collaboration between internal and external stakeholders Ensure that advisors and board members have access to relevant business information and documents. This transparency enables them to provide more accurate and tailored advice. Regularly seek their input on key decisions and strategies. Their external perspective can provide valuable insights and help avoid blind spots.

Collaboration and support do not just happen, even in the best of families, especially between different branches and among relatives across generations. Success will not be swift, or easily measured. The process can be most difficult for the founder/wealth creator accustomed to operating independently, and can also feel uncomfortable for generations accustomed to inactivity. However, with your support, if you can generate some enthusiasm for the process and achieve commitment and engagement from the different branches in your family and the current owners to work toward these common goals, it likely will become one of your greatest achievements – perhaps, even, your greatest legacy – and be well worth your time and effort.

Lot of times, the family businesses involve external advisors but they don't fully leverage them. External advisors can provide an independent perspective on the succession process. While internal stakeholders may be influenced by personal biases or familial dynamics, external advisors can offer unbiased viewpoints and recommendations based on their assessment of the business's strengths, weaknesses, and opportunities. Their objective viewpoint can help family businesses identify blind spots, challenge assumptions, and make better decisions.

Monitor Performance: Regularly assess the effectiveness and impact of advisors or board members on your succession process. Provide Feedback: Offer constructive feedback and acknowledge their contributions to foster improvement & motivation. Review Goals and Needs: Continuously evaluate your business goals, needs & the evolving challenges of the succession process. Adjust Expectations: Modify your strategies & expectations based on the outcomes of these reviews & the current business environment. Modify Agreements: Depending on their performance and your evolving needs, consider renewing, revising, or terminating contracts. Stay Flexible: Remain adaptable to changes in your business landscape or in the dynamics of the advisory relationship.

Regularly review the progress of the succession process. Are the objectives being met? Are there any emerging challenges or changes in the business environment? Monitoring progress helps identify areas for improvement. Gather feedback from family members, internal stakeholders, and the advisors themselves. Evaluate the contributions of each advisor or board member. Are they adding value and meeting expectations? Don’t be afraid to make changes if something isn’t working. This could involve adjusting roles, changing advisors, or tweaking the approach. Flexibility is key to adapting to evolving needs and circumstances.

Thoughts on next six steps: 1. Start where you are. You will have time later to worry about how, and where to grow. Don’t force it. It needs to fit your family. It doesn’t have to be complicated, so keep it simple. The key is to start, and where you are today is the best place to begin. 2. Engage an independent advisor. While your family is unique, and has an amazing story and history, families are families and many face similar challenges. Having someone with specialized experience, knowledge, and independent thinking can be a valuable partner. Contact us for steps 3-6.

External experts play an important role in managing the emotional side of family dynamics during succession. They can offer a neutral perspective and act as mediators by understanding the needs and priorities between family members. Their impartial viewpoint can help to manage emotional conflicts within the family, keeping discussions focused on practical solutions rather than personal conflicts. They can also help prioritize long-term business objectives over personal preferences and manage the complexities of succession with empathy and professionalism.