Most long-lasting businesses recognize the importance of considering and planning for management succession. This becomes particularly relevant for family businesses, where the choice of the next CEO involves decisions between multiple family members or even non-family members. The succession of management in family businesses adds an extra layer of complexity as it must navigate the traditional challenges of developing a successful plan while addressing the inherent family dynamics present in a family enterprise.

Ownership succession poses another challenge for family businesses. In many cases, the next generation of owners may not be actively involved in the company but will hold shares. This can lead to issues without a clear articulation of long-term objectives and well-thought-out policies regarding share ownership and transfers.

SGI has extensive experience working with family-owned businesses across generations, providing guidance on management and ownership succession planning. As a multigenerational partner-owned private business ourselves, we constantly contemplate this topic. When assisting our clients in developing solutions for their succession challenges, we consider a range of questions, including:

• How does the current management and ownership model impact the success of the next generation of family managers and owners? What about non-family managers?
• What alternative options for succession planning are being considered, if any?
• What discussions have taken place with the next generation regarding the management and/or ownership of the business? How are family members being prepared for leadership roles?
• How are decisions made regarding leadership succession? Is the process well-understood by both family and non-family leaders?
• Is there a process in place to educate and train the rising generations of owners and leaders?
• What guidelines have been established for stock ownership and ownership transfers?