It’s hard not to miss the news coming out of Rogers Communications Inc. these days. Long-simmering, previously mostly private tensions at the family-run company spilled out into the very public open in October, giving the rest of us the ability to be a fly on their boardroom wall.
At the heart of this feud is the succession plan laid out by family patriarch Ted Rogers, who built the company over almost 50 years and passed it to his family upon his death in 2008. His plan created a dual-class share structure, which gives one family member more power than the others.
As an owner/manager, your company may not be on the same level as Ted Rogers’ but that doesn’t make your succession plan any less important. If you don’t have one, what would happen to your business if you were hit by a bus tomorrow? And if you do have one, does it successfully help the company plan for the long-term?
Good succession takes time to do right. This means consulting with the right experts — whether it be financial, legal or logistical — to ensure your succession plan is appropriately mapped out. It also means properly communicating its details to all key stakeholders — whether it be family members, employees, clients or suppliers — to ensure all relevant parties fully understand the plan, what’s expected of them, and what it means for them.
The legal and financial work
An owner/manager shouldn’t simply wake up one morning and decide to give their business to a designated person. For starters, there are tax implications for both the business, the owner, and the successor, some of which can be mitigated by properly valuating the business beforehand. Having a good accountant by your side to ensure an accurate valuation will help alleviate the tax burden.
If the plan is to sell the company, rather than transfer it to a family member or employee, there are a number of things you can do to emphasize its key selling features, such as growing your bottom line, growing your customer base, or growing your top line. Each of these strategies take time to implement; working with the proper professionals can help in achieving these goals.
The communications work
The very public battle over company control at Rogers Communications Inc. may have been avoidable with clear communication of the plan before it took effect. (Then again, who knows, maybe the Rogers family was always destined to end up in court.) For owner/managers, sharing the details of your succession plan is no different than sharing your will with loved ones so they understand your plan for your estate after you are gone. It is important to make sure all key stakeholders understand your succession plan vision and how it affects them. Hold a family meeting, meet with employees, and talk to customers and suppliers. (The latter is only necessary in businesses where the owner is the face of the company, and should they no longer be a part of the equation the company may suffer if those stakeholders aren’t groomed to work closely with someone new.)
The bigger your business, the deeper your strategy needs to be. And remember, once you write a succession plan, it is not something to simply put on a shelf until it is needed. Like a will, it is a living document that must be frequently reviewed.