If you’ve watched the Roy family’s constant scheming, treachery, and power struggles on HBO’s “Succession,” you probably don’t want anything to do with any succession planning of your own. But even if your privately held business is worth somewhat less than their fictitious Waystar Royco, you might want to read on. In fact, some of this information should help you avoid such uncertainty and confusion down the road.
While the show may be fictional, it highlights some of the real-life challenges that families face when planning for the succession of their business. By highlighting, I mean showing you what not to do.
Lesson 1: Don’t Delay
In “Succession,” the patriarch of the family, Logan Roy, delays naming a successor to his media empire, leading to uncertainty and internal conflicts. This lack of planning creates uncertainty among family members and executives and leads to power struggles and internal conflict. (But, at least HBO is happy. The show is already in its fourth season, and we still don’t know who will be left in charge.)
Of course, in real life, failing to plan for the future of a family business can have dire consequences. That’s why it’s essential to start planning for the succession of a family business well in advance. By doing so, you can avoid disarray and potential legal issues that can be difficult to resolve.1
Lesson 2: Communicate Openly
Secrets may make for compelling TV drama, but they often make for lousy business relationships—especially among family members. One of the main sources of conflict in the series is the lack of communication between family members. The Roy family members are often in competition with each other and do not communicate openly and honestly about their feelings and intentions.
In contrast, when planning for the succession of a family business, it’s vital to involve all family members in the planning process and to try to understand everyone’s desires and expectations. This can help to build consensus and ensure that everyone is on the same page when it comes to the future of the business.2
Lesson 3: Consider All Options
The next-generation family members in “Succession” are hyper-focused on who will take over as CEO. There are, however, many other options for transferring ownership and management of a family business. This can include selling the business, transferring ownership to a trust, or hiring a professional manager.
When planning for the succession of a family business, it is important to consider all of the options and to choose the one that best meets the needs and objectives of the family and the business.3 It’s also helpful to remember that, in the long run, succession is part of the plan to maintain and build upon generational wealth.
Lesson 4: Address Family Dynamics
Family dynamics and conflicts complicate the planning process in “Succession.” The Roy family members have a long history of conflict and competition that makes it difficult to come to a consensus on the future of the business. To mitigate this in real life, families can work with financial advisors who specialize in planning for generational wealth. This is a good way to establish a family governance structure that outlines the roles and responsibilities of family members, as well as a process for resolving conflicts. By taking proactive steps to address potential conflicts, families can ensure a smooth transition of their business from one generation to the next.
Lesson 5: Update Your Plan
In “Succession,” changes in the family’s circumstances and business environment lead to last-minute changes in the succession plan. Instead, families should engage in long-term financial planning, updating their plan regularly. Changes should reflect any shifts in the business environment and ensure that the plan remains relevant and effective.
The Takeaway
“Succession” may be a fictional portrayal of a wealthy and dysfunctional family, but it’s also a cautionary tale of what can go wrong when families fail to plan for the succession of their business. By taking these lessons to heart and working with a financial advisor who specialize in planning for generational wealth, you can ensure that your family business pays dividends for generations to come—whether or not it stays in the family.
Sources:
1 https://www.forbes.com/sites/forbesfinancecouncil/2023/04/28/tips-for-creating-a-solid-business-succession-plan/?sh=17e605427148
2 https://www.thebalancemoney.com/tips-for-successful-family-business-succession-planning-2947038
3 https://www.forbes.com/sites/forbesbusinesscouncil/2023/01/04/succession-planning-dont-just-sell-your-company-train-your-replacement/?sh=798d7e3f3a23
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