Louis XV of France may have been the last CEO to have a firm grip on the succession issue. His mistress, Madame de Pompadour, told him, “Apr?s nous, le d?luge.” In loose translation, “It’s going to hit the fan once we’re gone.”
With the average age of independent advisors hovering in the mid-50s, many practitioners are beginning to grapple with the problem of What Comes Next. Should they retire? If so, when and how? Should they sell the business or their client list?
The business metrics involved are often mind-boggling, but the emotional issues can be even more complex. If you’re having difficulty coming to terms with what you want your future to look like, it may help to consider situations other advisors are facing.
I’m thinking about retiring in the next couple of years, while my wife and I are still young enough to pursue our dream of long-distance sailing. I want to find another advisor to take over some of my clients, but am not sure what criteria to set. How should I approach this? To begin with, I would suggest taking a day or two out of the office to focus on some crucial questions.
Ask yourself what is most meaningful to you about your work. What qualities and values do you most prize in the way you have run your business? Is there a legacy you want to leave behind, or a torch you would like to pass to others who share your principles? When you actually leave the business, what kind of situation would you like your clients to be in?
Once you begin clarifying issues about your values and your future, a course of action will begin to take shape. Talk to a number of retired advisors, so you can determine the benefits and pitfalls of the particular choice each of them made.
If you decide to transfer your business, you may want to take advantage of such specialized consultants as Business Transitions. The three major custodians–Schwab, Fidelity, and Waterhouse–also offer business succession services. In any case, be sure to interview possible buyers slowly and thoughtfully to see if their vision corresponds with yours.
Try to find a way to work together for a while or observe their work with their own clients.
The most important step in this whole process is clarifying what you want to pass on to others, and what you want to take with you. Only you can identify these elements. Once they’re clear in your mind, it won’t be too hard to find whatever business succession support you need.
My partner and I, who are both 57, have always gotten along well. However, I want to retire in the next five years and he doesn’t. We can’t get past this difference of opinion to find a solution we can both accept. Any ideas? It sounds as though there’s more to this situation than you’re saying. Do you have reservations about selling him your share of the business? Maybe you feel that he (and your clients) would be better off if he sought another partner whose skills and talents complement his own. Have you been fully open with him about issues like these?
It’s essential to sit down together to share your different hopes and dreams. This could take one meeting or several. Try to communicate with your partner in a way that respects his abilities and honors his position, while asserting your opinion about what’s best for the company.
If you are fully committed to retiring, you might consider hiring a business consultant to help brainstorm the best way to accomplish this major transition. This may make it easier to decide whether to sell your interest to a third party, or to let your partner buy it and see if he needs someone else to run the business with him. Once a course of action has been set, you can turn to a qualified business valuation firm to determine what your company is worth. Other “matchmaker” specialists can help you find a buyer for your share of the business.
Whatever the two of you agree to do, and on whatever timetable you do it, be sure to discuss your thoughts and feelings about this major change in your long-standing relationship. If you created something that was valuable and good, it deserves to be mourned with respect. Good luck in turning the page to a new chapter in your life.
As the head of a mid-sized firm, I’m planning to groom a few individuals for the next generation of company leadership. How can I keep other valuable employees from losing heart or jumping ship when they realize they’re not in this select group? Many of us are inherently competitive–a quality that engages our feelings of self-worth and self-confidence. Dealing with these issues is always a delicate and difficult task.
Therefore, I urge you to be as explicit as possible about your succession plan. Consider calling a meeting of the whole staff to discuss the firm’s future. If you contemplate other changes as well, you might conduct a longer, more intensive staff retreat.