Succession Planning 101: Things to Consider at the Start

ICCFA Magazine

It’s tough out there unless you are the “1,000 pound gorilla”—Amazon, Proctor & Gamble, Walmart etc.—who dictates the terms. Let’s face it, whether you’re a funeral operator, a cemeterian, a manufacturer, a service provider, accountant, lawyer or retailer, margins are squeezed, yields are being compressed and we’re all being asked to do more with less.

Assume, for example, that you are the operator and president of a second generation, family-owned funeral home. You have worked and grown the business for 35 years and have begun thinking about retirement.

You believe that the “good life” is three years away. However, there is nobody currently in the organization who is capable of stepping in to run and lead the business. The quandary is that you can’t get to the good life without solving this dilemma.

Furthermore, there are three family members working in the business. Their families and future generations are counting on you.

Finally, your dad, who is in his early 80s and who stepped back from management about 15 years ago, reminds you of your responsibility to secure the future of the family business as he did for you.

Succession planning is one of the most important steps to effectuate personal retirement goals and perhaps one of the toughest to execute. It can be unbelievably painful to think about. It is awkward and uncomfortable to discuss because it is tough—almost impossible—to make all stakeholders happy.

However, as one of my clients said to me: “My spouse’s biggest concern is that I will become president and CEO of a funeral home which my spouse would be unable to run if I died.”

How much easier it would be to ignore this difficult and unpleasant subject. However, there are dangers in not considering succession—disability or death may occur, leaving the business without management and unable to operate.

The absence of a plan of succession is, by a long shot, the most likely cause when a death-care business becomes distressed, leading to business failure or sale at a distressed price.

As you begin to consider a plan of succession, there are a number of things you should consider.

To read the full article, please click here.

“Succession Planning 101: Things to Consider at the Start,” by Robert D. Katz* and Lewis J. Hoch was published in the January 2018 edition of ICCFA Magazine. Reprinted with permission.

* Robert D. Katz, CTP, CPA, MBA, is a managing director of EisnerAmper LLP’s financial advisory services group.