Management Succession

Often overlooked, but critical, management (versus ownership) succession involves:

• Successor(s) commitment to run the business - want to? Able?
• Strategic plan - particularly vision & key measures
• Evolutionary org structure
• Management team
• Timelines
• Key person dependency - need to reduce
• Roles - now and later; expand roles & decision making
• Develop people- need to identify possible successors throughout, determine development gaps, and groom them
• Compensation matters
• Bridge successor(s) - a possibility if there is a gap
• Identify succession obstacles

Rice & Associates role towards management succession includes finding out needs/wants of various parties, and assist in whatever above areas need to get done.

Ownership Succession

All owners will exit their businesses. Owners need to prepare for and protect against crisis/untimely exit. Owners also should plan to increase value, maximize cash, reduce tax, reduce risk, and better ensure business & family continuity at a timely exit.

Timely/Orderly exit options include:

• Retain ownership - with successor management
• Gifting - outright; or with deferred compensation, family limited partnerships, annuities, consulting, or similar concepts, which:
  > Transfer non-controlling ownership to children or others
  > Allow owners (often parents) to retain control for some time
  > Provide owners a post-retirement income stream
  > Legitimately provide tax advantages - enable successor to pay for business in pre-tax dollars (as does leveraged debt)
• Sell - to outside, family, or employees (co-owners, management, or ESOP)
• Liquidate

Towards ownership succession, Rice & Associates acts as a confidant to owners - getting owners to address “think about” questions and bring clarity to their objectives, and also finds out needs/wants of various parties. After determining what needs to get done, Rice & Associates coordinates and works together with legal and other specialists towards valuation objectives & valuation itself; business continuity, including control, buy/sell agreement, and life insurance; stock classes and transfers; net present value of deferred compensation or similar concepts; decision rights; family harmony, legacy, vision, values, goals, and policies; and relating ownership succession matters. Rice & Associates also directly assists in a business sale.