Summit's Family-Owned Business Succession Planning Model is needs based, client centered approach coupled with extensive technical skills. Our conceptual model views the family-owned business as three independent and overlapping systems-family, business and ownership. With our "systems" approach utilized in our succession planning services, we draw strength from the shared history, identity, and common language of families. This systematic approach allows everyone to see how organizational roles color a person's point of view, personality and behavior. With this foundational base we are able to integrate the needs of the family, the business, and the owner alike, resulting in an objective comprehensive plan.

It has been our experience that most business owners have been quite adept at implementing their own decisions, but are often unable to effectively communicate clearly with family members. Quite often the very skills and talents which have made the entrepreneurial leader successful, are the same skills and talents which prevent them from being able to let go of the day to day leadership of their company, let alone give up ownership. Clearing a path for effective communication requires getting centered and understanding the different hat people wear at different times. What family members feel they should do may be very different from what each one wants to do. So, the ability to distinguish a sense of obligation of what is right for the family and also for the business is critical and a starting point for improving communication.

The foundation of any succession plan should be an understanding how a families values and ethics translate into behavior. After all, values are often demonstrated in the culture of the family business. So, family values and ideas must be continuously shared and integrated into whatever plans the family has for continuing the business into succeeding generations. Children and successors should be a part of the communication process in order to understand the owners values and goals. Since every family owned business operates from a value system, this set of values creates the emotional foundation for the way in which future generations should lead their own lives and the manage the continuing business.   

Interviews and Data Gathering:  (Family)

A series of individual interviews are conducted with all representatives of each generation. - Those family members both in and out of the business, including spouses. When appropriate, key non-family executives may also be a part of the interview process. A full range of views is essential to identifying the issues that need to be addressed and identifying those common values and goals that invariably run through the generations regardless of the extent of their involvement in the enterprise itself. It will be upon these values that we build a successful succession plan.  The end result of an analysis is the development of a Family Plan.

Interviews and Data Gathering: (Business)

The first step in understanding how the business is managed comes from an independent business analysis which will focus upon in these key areas: (1) Financial performance (three to five year analysis), (2) Sales and Marketing performance, (3) Organizational Structure and Human Development Process (operations), (4) Information Systems, and (5) Product Research and Development/expansion. When analyzing the financial performance of the company we will focus upon historical profitability, use of capital with a specific focus upon the change in gross margins (as compared to the industry). The ultimate goal is to increase profits without sacrificing the values which come out of a family-owned business. Our organizational assessment is intended to reveal the management structure, use of human resources and benchmarking individual performance. In addition, we are concerned about the ongoing development of those family owners who are in the business and capturing the highest level of success based upon their training, expectation and passions. In the sales and marketing area we will be interested in the growth plans of the company, its present market share, its market niche and ways to increase sales, or efficiencies. When we review the product development we are focusing upon quality control, pricing, and the actual manufacturing, service or distribution process which is found within the business. The end result of this analysis is the development of a Business Performance Plan (Family Members) which will incorporate the best style of leadership and management skills.

The most important goal to be addressed in succession planning is whether to keep the business in the family, or sell it to a third party. Extraordinary commitments and compromises often will need to be made in order to perpetuate the business. In considering ownership it is essential that the family goals are not in conflict with each other. If the present owners goal is to husband the company's assets so the assets can be used to buy him out so that he can retire then the successors goal cannot be to leverage the business assets so that added capital can fuel growth. Both goals can be met, but the needs of the Sr. Generation must be prioritized and clarified in the terms of the succession plan.

From an estate perspective most parents want to leave their assets equal to all children. This need is often magnified when the major asset is the family business. Often absentee ownership (child outside of the business) hampers the decision making process as the needs of those in the business is different than those outside of the business. For example, whenever a company makes a capital investment and increases debt the ability to service the new debt and continue to pay out to non-working owners may become difficult. For one, the owner in the business, additional capital investment is needed to grow the company. For the other, the non-business owner, the increased debt could reduce profits thereby reducing their annual distribution. In this case equal ownership presents a major challenge. Left on its own, the difference between their needs often results in serious conflict between the siblings and can have a far reaching impact upon the family. It is important to treat siblings fairly. At the same time, a decision must be made and do that which is in the best interest of the business. Often the solution is to treat each child equitable, while at the same time, not being required to treat each child equally. Or, if equal, provide ways in which the company can fulfill its requirements without sacrificing the future of the business.

Role of Summit Intermediary

As professionals who serve family-owned businesses our role is to facilitate the planning process which will best meet the needs of our individual clients. We are a firm who combines our knowledge and experience with other disciplines within our succession planning services. As Advisors we have an in-depth knowledge of different disciplines and will often interface with existing advisors or bring into the planning process those professionals who best can meet the needs of our clients such as mediation skills, legal (corporate and estate) expertise, Tax, (Individual and Corporate) planning, organizational development, leadership development, business management, and business valuation. Our goal is to serve as the quarterback of the succession plan so that all aspects of transfer are handled with the highest degree of integrity and professional competence.