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Why You Should Never Do Succession Planning


Many CPAs and advisors offer succession planning services to their clients. A problem is that most of our clients that should have some plans do not want to spend the fees necessary to have any sort of a plan; but if they still own the business when they die, they will leave a massive mess for their family and loyal employees that assisted in helping them get where they were. That’s where the CPAs and advisors they did not listen to really make big fees

The problem for people like me is that it is triage, salvage and reduce-the-problems work instead of creative wealth building for the owner, his or her family and their loyal employees. We make good money but it doesn’t provide the level of satisfaction we like to get when performing our highly skilled services to prevent problems and help assure a smooth transition.

It is what it is. We cannot spend our clients’ money and certainly cannot tell them they will be screwing their family and longtime employees and also causing huge fees that could have easily been avoided by a little effort and forethought. So, if you like leaving a legacy of confusion, anger, contention and high professional fees, do not do any succession planning. And I regretfully thank you in advance on behalf of all of the CPAs, lawyers and valuation specialists for the income stream you will be leaving behind.

If you spend a few minutes thinking about it, you will rush to get some sort of plan in place and in most situations any plan is far better than no plan. Just as an FYI, here is a brief description of a specialized consultation that I and many other CPAs and advisors offer clients in this important aspect of an owner’s confrontation with their no longer being able to call the shots.

  • I am retained for a consultation to help the business owner determine what they want to do, can do or are willing to do. In my experience, many strong-minded and strong-willed entrepreneurs have trouble crystallizing their thoughts when forced to confront their retirement or mortality and an informed experienced advisor can help with this.
  • At that meeting, I discuss, in general terms after reviewing the business’ financial data, how the business could be valued based on different types of buyers and how the owner could identify value drivers and the best potential buyers. For this, we don’t do a big deal conclusion of value report, but we have a discussion with indications of the value under various circumstances.
  • One of the things we do at the meeting is to provide an understanding of the process when someone dies or becomes permanently disabled without setting up a continuation plan. When there is no plan it becomes costly and time-consuming for the survivors, and creates contention in the family and actually has loved ones not thinking good thoughts about how you left them a mess to deal with.
  • An important issue that we discuss is ways to accomplish an eventual transfer to employees if that’s what you want, the transition process, whether a sale is something that should be considered or if a work-until-you-drop policy is the best way to proceed.

To help owners in the process I send them a bunch of speech handouts, articles, and a preliminary document request. I have been doing this a lot lately and have put these in a single file which I will email to those requesting it by emailing me at GoodiesFromEd@withum.com. Just put Succession Planning or SP as the Subject.

Do not hesitate to contact me with any business or financial questions at emendlowitz@withum.com or fill out the form below.

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