Want to hand control of your business over to your kids without causing chaos? Or take control of it from your parents? A business succession consultant can help. Here’s what to ask before hiring one.
01. My aging parents refuse to cede control of the family business. How can I get them to make the transition?
“Resistance of the senior generation to address succession is the biggest issue we see,” says Paul Karofsky, CEO of Transition Consulting Group, a Massachusetts and Florida-based family consulting firm he runs with son David. Often, “mom and dad don’t have a plan for their lives beyond the business,” explains Glenn Ayres, president of Glenn Ayres & Associates, a family-business consultancy in San Diego. A consultant can help the older generation plan the next phase of their business and lives.
02. My children want nothing to do with the family biz. Can you change their minds?
“A lot of the time, children don’t even know the particulars of the business,” says Wayne Rivers, president of the Family Business Institute in Raleigh, N.C. Gradual exposure may draw them in. If not, accept that your kids have other dreams.
03. My child doesn’t want to run the firm, but still wants to be involved. Is that a recipe for disaster?
Not necessarily. “Many large family businesses don’t have family members in management roles—those are becoming more professionalized,” Ayres says. “But they often have a family council, like a board of directors, that keeps them involved.”
04. Can you help prepare my children for management?
“Just because your last name is the same as the company’s doesn’t give you the automatic right to take over,” says David Karofsky of Transition Consulting Group. Try rotating younger family members through core areas of the business. “It allows them to build relationships and identify their skill sets,” Karofsky says.
05. How early should I be thinking about succession?
“A 10-year window is ideal, but it almost never happens,” says Rivers. “The earlier the plan is made, the more likely it is to succeed,” Paul Karofsky says.
06. What do you charge?
Succession consultants generally cost $2,500 to $10,000 a day, but can also bill per project. “A typical project would be in the neighborhood of $25,000 to $35,000 over six months,” Rivers says.
07. An unexpected death in the family has left us with no leader and no plan. Can you help?
“We implement the process that we would have conducted if the death hadn’t happened,” says David Karofsky, “but with more sensitivity.” That includes evaluating the business, interviewing key players and identifying leadership candidates.
08. What experts do you bring to the table?
Family succession issues can range from management failures to drug and alcohol abuse to parent-child conflict to divorce. Make sure your consultant can handle a range of challenges.
09. Are you certified by the Family Firm Institute?
This trade association (ffi.org) is the closest thing to a governing body in the field.
10. Can you provide references?
Talk to a consultant’s former clients, particularly if they faced similar issues. “Ask how the process worked for them,” David Karofsky says.
For more information, contact: Glenn Ayres, Glenn Ayres & Associates, firstname.lastname@example.org, 619.437.0126, gayresandassociates.com; Paul and David Karofsky, Transition Consulting Group, email@example.com or firstname.lastname@example.org, 508.875.7751, fortcg.com; Wayne Rivers, the Family Business Institute, email@example.com, 877.326.2493, familybusinessinstitute.com.