10 Myths of Succession Planning for Middle Market Businesses

Mark Bronfman leads the BOLD Value service line in Sagemark Consulting, a division of Lincoln Financial Advisors (www.boldvalue.com).

In his excellent book, Stumbling on Happiness, Daniel Gilbert explains that most people fundamentally lack an imagination to understand the actions today that will bring true happiness tomorrow. Business owners also suffer from this myopia - living in a world of myths about how they can successfully grow and exit their business in style. It's time to debunk these myths.

Succession is like happiness - it is easy to talk about and much harder to attain - precisely because it takes imagination to act differently. In succession planning, if you want to eventually EXIT your business, PULL and attract people and capital to it today.

Doing succession right can be so empowering. This is possible because an effective leadership and capital succession strategy increases your company's value; enhances your employees' commitment to the company; expands your exit strategy options (keep, sell, go passive, etc.); strengthens your balance sheet; and provides personal "psychic" benefits. In short, having the right succession plan is one of the shortest paths to achieving the deep fundamental desires of business ownership.

After counseling over 100 business owners on succession pathways ranging from lifestyle businesses to going public, I am convinced that many business owners do NOT know how to powerfully achieve leadership succession and capital succession. I offer below executive compensation, capital structure and exit planning strategies as a portal into the ten myths and realities of succession planning.

10 Myths of Succession Planning.pdf