Posts Tagged ‘succession planning’

Tom Sponsel featured in Exit Plan Show

Managing Partner Tom Sponsel is featured in a new video from the Exit Plan Show, a web TV series dedicated to helping business owners enjoy more freedom, grow companies faster and retire on their own terms.

Succession Planning: Keys to Post-Career Happiness

(Part 6 of 6)

Tom_SponselIn our previous article on succession planning, we talked about how to invest the proceeds from the sale of a business. In this final installment in the series, let’s discuss the keys to a happy post-career life.

It’s probably not surprising that people who own or run a company tend to be hard-charging, goal-oriented folks who thrive on staying in the thick of things. They’re usually type-A personalities who enjoyed the feeling of running a business and having people report to them on a daily basis.

As such, they often experience the biggest challenges in transitioning to retirement or other post-sale undertakings. They’ve spent so much of their lives striving for success that they’ve never really given serious thought to what they will do when they retire. They lose their sense of relevance.

Much of the time it comes down to sheer boredom. Former business owners may find themselves getting their newspaper in the morning, drinking their coffee, walking the dog – and by 10 a.m. they have no idea what to do with the rest of their day. They miss that sense of people coming to them for their opinion and leadership, and it affects their psyche. They wonder, “Am I still a valuable person?”

At Sponsel CPA Group, we have known clients who eventually sought professional counseling for their post-sale blues.

In my experience, those who find the most post-career happiness are those who find a replacement for that sense of purpose they had when they owned a company. They find something that brings them fulfillment and pursue that with the same zeal they had for business.

It can be a hobby, working with charitable organizations, or anything else they’re passionate about. The key is to recognize this stage of life as being the start of a new chapter rather than the end of an old one.

This could take the form of actually creating a new business. For example, the man who loved tinkering with old cars and ended up opening a car restoration shop. Or it could be volunteering with a local non-profit whose civic philosophy aligns with your own. Many business owners have gone on to be fine executives of not-for-profit groups.

As you’re starting the succession planning process, start thinking about the activities you do outside of work that make you feel really good about what you’re doing. These bring you joy, a sense of purpose and satisfaction. Once you’ve figured out what they are, talk to people who spend most of their time at those endeavors to see if there’s a way you can get involved.

During this stage, don’t neglect to speak with your family. Any major life changes you make will also impact them and your relationships with them.

Some post-sale “retirees” find themselves busier than they ever were when running their company. Others are soaking up a life of well-earned leisure. Most fall somewhere in between.

In general, those who have made the succession transition most easily went about it in a very deliberate way. They had a concept of their specialized interests and talents, and leveraged them for happiness in the next stage of life.

If we can assist you with any succession planning issues, please contact Tom Sponsel at (317) 608-6691 or email

Most family-owned businesses lack a succession plan

Jason Thompson thumbA new survey by PricewaterhouseCoopers LLP shows that the majority of family-owned businesses in the U.S. lack a succession plan — and that’s not good news for the next generation that will eventually take over the company.

According to an article in

“PwC surveyed 154 owners, leaders and top executives of U.S. family businesses and found that 73% of respondents admitted they do not have a documented and robust succession plan in place for senior roles. Moreover, two-in-five respondents say it would be difficult to hand over complete control to their successors, and 56% would remain involved in management longer than optimum to ensure a smooth transition.

This does not bode well for survey respondents who are “next-generation” family members, as 47% say the delay in handing over the reigns was creating an age gap that was making succession more difficult.”

Alfred Peguero of PwC labeled this “Sticky Baton Syndrome,” in which the older generation of management hands over control of the firm in theory, but remains in charge of what really matters. As a result, transitions take longer and potential successors don’t gain the experience they need to run the company.

Here at Sponsel CPA Group, we advise business owners to start planning 5 to 10 years out for succession — though it’s never really too late to get started. If you would like to learn more, read our ongoing series on succession planning, or contact me at (317) 608-6694 or email


Succession Planning: Investing the Proceeds

(Part 5 of 6)

Nick HopkinsIn the previous article in our series on succession planning, we looked at how to avoid the post-sale blues. Now it’s time to talk about how to best manage the assets you have obtained as a result of selling your business or ownership stake.

If everything has gone as planned, you now have a sizeable amount of liquidity with which to invest, and possibly more cash coming your way per the provisions of the sales agreement. The next step is for you and your family to take a hard look at what to do with these funds, both in terms of investing the proceeds and passing it on one day.

The first thing you should do is comprehensive estate planning. This includes important matters such as a will, a living trust, a power of attorney for healthcare situations and a living will. Decisions must be made on how the estate will be bequeathed to your beneficiaries, whether family members or charitable organizations.

We recommend that you revisit estate planning every three to five years, since circumstances can change greatly over that span of time. New charities may have cropped up that you want to give to. Someone who had agreed to serve as trustee could be having second thoughts. You may have had a falling out with Uncle Joe.

It’s not just about emotional relationships, but who can best serve in the role of trustee. A friend or family member may have been a solid choice when your estate was small, but now that it is flush with the proceeds of a sale, it might make more sense to turn to a co-trustee, bank or trust company to oversee the risk of a larger cash pool.

Estate planning requires some hard thought on what sort of lifestyle you want to have in retirement, how much income that will require, and what sort of philanthropic choices you want to make. Many families set up a private family foundation as a vehicle for charitable contributions.

The next stage is to determine how to invest the money. Many successful business owners have kept the large bulk of their personal wealth tied up in their company, and can be unsure how to leverage the proceeds into a reliable income after they retire. You will need to assess your tolerance for risk, as well as your spouse’s, to help determine where your money should be invested in the various market channels — such as public stocks, bonds, private equities or alternative investments.

It’s prudent to hire an investment advisor to give you professional counsel. In selecting them, you should pick someone who meshes well with your personality, has an investment approach similar to your goals, and who you feel you can work with in the long run. It may make sense to interview at least three candidates before making your final choice.

In the accounting profession, we call the sale of a business a “liquidity event,” since it usually results in the quick acquisition of a large amount of liquid funds. For most people this is an once-in-a-lifetime occurrence, so you want to be in a position where everything from an investment and estate planning perspective is well managed.

Your investment choices should be appropriate for your age, stage of life and risk tolerance. If you retire at age 65, your life expectancy is around 87. With 22 years of life left, that’s a long period of time to plan and prepare for to make sure your money lasts. A lot of people will see that they’ve got a couple of million dollars banked and think they’re set for life. But that is not always the case, especially with unforeseen circumstances like a medical crisis or a downturn in the market.

Some people are not comfortable with equity markets, and can’t handle swings in volatility. Just this past week we’ve seen the Dow Jones fluctuate by several hundred points. The real test of your investment approach is if you can sleep well at night and not worry constantly about your nest egg. You worked hard to build your business and find the right buyer, so you deserve peace of mind.

If you have any questions about how to manage the post-succession process, please call Nick Hopkins at (317) 608-6695 or email

Succession Planning: Avoiding the Post-Exit Blues

(Part 4 of 6)

Jason Thompson thumbIn our previous segments of this series, we have discussed the sequence of events leading up to the exciting big event that the business owner has worked toward: when you “cash out” and head towards your “second career” in retirement.

We find that many owners who go through this process do not always prepare themselves for the post-exit transition period. This can be a very challenging existence for a number of reasons.

Many sale agreements require that you remain with the company for a transitional period — usually 6 months to two years. During this time you may find that no longer being “in charge” is not only foreign to you, but a situation that you find incredibly frustrating. You may find that the new owner is making changes to your “beloved operations” that are very different from your philosophy and inconsistent with the way you ran the business for 20, 30, or 40 years!

You may also find that your former employees are not being treated in the manner that was at the core values of the company when you owned it. You may also find that after the initial transition period, you are still being paid and have an employee agreement, but there is very little for you to do but answer questions. You may even come to question in your own mind what your value is to this endeavor.

Our experience is that in about 40%-50% of these cases, the former owner terminates the transitional employment agreement before its term is complete. The former owner will be challenged by his or her own relevancy to the company they used to preside over, as the “troops” are now seeking direction from the management team installed by the new owner.

So as an owner contemplating a sale of your company, how do you avoid these pitfalls? To a certain degree, you can’t, as they come about as a result of a natural human reaction to life’s events. But you can help yourself as follows:

  • Psychologically prepare yourself for this change. Many owners have sought counseling, or at least conferred with other business owners who have experienced a similar transition.
  • Talk very candidly with the buyer and clearly define your terms, conditions and responsibilities during the transition period.
  • We would recommend agreeing to a short transition period as practical, with options to extend upon mutual agreement, rather than a longer period.
  • In the sale or exit event, if there are people or conditions you want to see maintained, negotiate for those in the sale agreement. Because after this transaction, you are no longer the owner, president or CEO – you gave up that authority upon the sale, and hopefully have a much larger bank account to show for it!

The key to a personally successful exit from your company and avoiding any second-guessing after the transaction includes:

  • Honest self-reflection on your personal motivation for exiting, and acceptance that your professional life will change!
  • Proper planning in all phases and negotiations of the transaction.
  • If you have any “sacred cows” of any sort, cover these in the legal agreements related to the sale.
  • Discuss any apprehensions with your spouse or significant other, as you will need their listening ear and support.
  • Make it a fun event!

We as a firm have done a multitude of exit transitions on a number of different scales and structures. If we can help, please give us a call Jason Thompson at (317) 608-6694 or email

Popular Tags