Role of External Advisors in Succession Planning: The Benefits of Involving External Advisors in the Succession Planning Process
Succession planning is essential for the continuity and longevity of multi-generational family businesses. The intricate dynamics of family relationships, coupled with the complexities of business management, necessitate the involvement of external advisors. These advisors, including consultants, mentors, boards, lawyers, and accountants, bring expertise and an objective perspective crucial for navigating the succession process.
The Value of Objective Perspective
One of the primary benefits of involving external advisors in succession planning is their ability to provide an objective perspective. Family businesses often have emotional ties that can cloud judgment and lead to potential blind spots. External advisors, who are not emotionally invested, offer unbiased insights and recommendations. This objectivity is vital for addressing sensitive issues such as leadership transitions, roles and responsibilities, and conflict resolution.
Expertise and Experience
External advisors bring specialized expertise and experience that may not be readily available within the family business. For instance, consultants with a background in organizational development can help design a robust succession plan aligned with the business’s long-term goals. Mentors with experience in family business transitions can guide the next generation in developing leadership skills. This expertise ensures the succession process is smooth and strategically sound.
Facilitating Communication and Conflict Resolution
Effective communication is essential in succession planning. External advisors can act as neutral facilitators, fostering open and constructive dialogue among family members. Their presence can help mitigate conflicts by ensuring that all voices are heard and respected. By facilitating communication, external advisors help create a collaborative environment where family members can work towards a common vision for the future.
Legal and Financial Guidance
Succession planning involves numerous legal and financial considerations, from estate planning to tax implications. Lawyers and accountants provide critical guidance in these areas. They help structure the succession plan to minimize tax liabilities, ensure legal compliance, and safeguard the family’s wealth. Their expertise is indispensable in creating a succession plan that is both legally sound and financially prudent.
Familiarity with Service Providers
It is important that external advisors, such as those with an FEA (Family Enterprise Advisor) designation, have familiarity with service providers such as lawyers and accountants. This familiarity ensures a cohesive approach to succession planning, where all aspects are seamlessly integrated. An FEA can coordinate with these professionals to provide comprehensive advice, ensuring that legal, financial, and operational considerations are aligned.
Conclusion
In conclusion, involving external advisors in succession planning offers numerous benefits for multi-generational family businesses. Their objective perspective, specialized expertise, and ability to facilitate communication and conflict resolution are invaluable. For family businesses committed to long-term sustainability and growth, including external advisors in succession planning is essential. FEA’s are specially trained to design and implement succession programs which address the unique needs of the family business and ensure a successful transition of leadership.
Andersen Canada Contact
 | Shondell Sabad CFA Director, Consulting |  | Krista Rabidoux, CPA, CMA, FEA Partner |
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