Succession planning - a peaceful, balanced experience?

Mark Kippenberger, KPMG's Head of Family Business Services in New Zealand. Photo / Supplied

You started slow, worked hard, and over the last few decades you've built up a successful business? You're now thinking about retiring and passing on your empire to your children.

You are mindful that some of your children can't decide whether they want to join the company or try something new.

Here's a succession self- assessment checklist you can use. The checklist will help you understand your succession readiness and help you recognise that that family dynamics and family attributes vary from family to family and from generation to generation.

1- Creating a legacy: Is it important for you that your business stays in the family? Do you think it is important to the next generation that the business stays in the family?

2- Timing: Have you established a timeline for the management and ownership succession process? Is it clear to you when the next generation should begin taking over management? Have you communicated this with them?

3- Comfort level: Family issues and/or business issues will no doubt impact the future management and ownership of the family business. As an owner and parent, you may not feel comfortable or well equipped to deal with some of these issues. What are you doing to separate business from emotive thinking?

4- Options: as you think through the succession issues, do you feel comfortable that you are aware of the kinds of options available to you? Do you know where to get the relevant information and can the next generation make informed decisions about your individual and collective futures?

5- Communication: Communication is often considered to be the single more important aspect of a successful transition. You must ensure that you are not making decisions based on assumptions, but rather on factual information expressed by those who are impacted by the succession process.

Do you have a succession forum (i.e., family business meetings for the active family members and family council meetings for the broader family) that deals with succession issues and the succession process? Do you feel comfortable leading these meetings? Have you considered using a family business practitioner to get the family meetings started?

6- Guiding principles: As the business founder, establishing guiding principles will help steer the process and help manage family members' expectations. A formal process to discuss management and ownership succession issues that results in agreed-upon succession principles can pave the way.

7- Successor(s): Have you identified your successor(s)? Has this been communicated to the next generation and do they agree their development path forward?

8- Changing role: Have you thought through the kind of role you want to play during and after the management and ownership transition? Does the next generation support this role?

9- Income security: Is most of your disposable income tied up in the family business? Do you know how much you would need to draw from the family business once you have transitioned it to the next generation? Are you concerned about the security of your wealth tied up in the business?

10- Managing conflict: Some degree of conflict among family members may arise. Left unattended it can have dramatic negative effects on family relationships and on the business. Is there an agreed upon process to deal with family conflict? Is it working for you?

11- Business Strategy: Is the next generation planning to take the business in the same direction that you do/would (growth, profits, risk and investments)? Have they demonstrated their ability and explained their intent?

12- Exit strategy: Will the shareholder agreement for the next-generation owners include an exit strategy that is considered fair and amicable to all parties while safeguarding the financial viability of the family business? Will it address incapacity, death and voluntary retirement?

13- Network with other family businesses: Share your ideas with other family businesses and learn from them. Conferences such as the Family Business Forum which is to be held this year on 5 July at Eden Park are ideal opportunities to share and receive ideas.

And finally, give credit when credit is due - Celebrate your achievement. If you have completed your family business succession plan, celebrate! Most family businesses don't get there. Make it an important accomplishment and let your family know you are proud of them.

Mark Kippenberger is KPMG's Head of Family Business Services in New Zealand