Identifying a Successor Who Has What it Takes
Source: AICPA CPA Insider
The following includes excerpts, reproduced with permission, from an article by Heidi Bolger.
Beyond all the financial wizardry that's essential to effective succession of ownership, succession of leadership in a client's business is even more important to business transition. Without well-chosen and well-prepared leaders, the business won't thrive and the buy-out payments to our clients may never materialize.
Who Should Choose the Successor Leader?
If your client's business is closely held with a next generation family member or two, this may seem like a no brainer. There may also be a longer-term employee or two who seem to be the right fit. Your entrepreneurial client may be comfortable in making this choice on his or her own. With smaller, less complex enterprises, a selection process can also be designed to draw on the insight of a circle of trusted advisers.
For larger, more complex clients, I advocate the formation and use of a “Talent Management Committee” in some form. This executive-level team is responsible for mapping the strategy for attraction, development and retention of talent in your client's business.
What Should Your Client Look for in a Successor?
Although there's certainly not a one-size-fits-all list of leader characteristics, some important aspects for consideration are below:
Core Level:
- Trust
- Shared Values and Vision
- Embrace of Business Philosophy
- Commitment and Loyalty
Technical Competencies:
- Relevant Education and Experience
- Required Critical Skills (Deep Understanding of Products/Services and Customer Needs)
- Track Record of Profitable Management of Operations
Leadership Competencies:
- Excellence in Communication
- Well Connected and Excellent at Relationship Building
- Strong Motivational, Mentoring, and Accountability Skills
- Creativity to Take the Business to the Next Level
For the complete article, read “Making the Right Successor Choice.”
From AICPA CPA Insider, February 6, 2012, www.CPA2biz.com.