Are you a CEO who’s just exited the business you’ve built over many years? Or, perhaps it’s something that’s on your radar in the near future, and you want to ensure that you plan the best exit you can from your business?

These situations are quite common, particularly in family-owned enterprises. Ideally, you’ll plan a methodical and careful exit strategy to optimize success for your successor, whether you’ve chosen to hand over the reins to one of your children, a relative or someone on the outside.

It’s also important to remember that you, as the original CEO of your company, are the greatest resource your successor could hope for to improve the odds of a good succession. Your experience and expertise took years to acquire, through sweat equity and the sheer determination to succeed. So you’ll want to groom your successor over time to ensure they have the right tools to continue in that success.

Two things you’ll want to address are:

• Making sure you’ve outlined a clear financial strategy that will ensure your family is taken care of for years to come.

• Leaving your business in good hands to ensure the integrity of your family’s main source of income.

Transitioning your power and leadership to another person takes a concentrated effort from all parties. You’ll want to work together to ensure a successful succession plan while keeping the dynamics in place to ensure success for your company for the long term. Successful transitioning is of even more importance if you’re a first-generation CEO passing the torch to the second generation. This is because you’ll naturally want to ensure the financial integrity of all parties, particularly where your family is concerned.

Passing The Torch To A Second Generation

There are many considerations when a successor is one of your children. For instance, if you have three children and plan to appoint one as the next CEO of your company, sibling rivalry might come into play. After all, you’re basically handing the business (and likely your largest asset) to one child. One thing you might consider doing is giving the other children a larger share of another type of asset, such as investments or real estate. Or, you may choose to give non-voting shares of stock.

There are many options when it comes to sharing the wealth in the business you created. A wealth manager can help you decide which route is best for your particular situation. At the same time, because you are leaving the company as CEO, you’ll want to make sure you and the rest of your family have a good strategy to maintain your private wealth.

A successful transition requires good communication with formal written agreements. This will ensure a positive outcome for you and your family. Making sure you have all the proper documents in place ahead of time is too important to put off until a later time. Unforeseen events can happen at any time. You’ve spent a lifetime caring for your family and, in most cases, decades building your company. You don’t want to wait until the last minute to get prepared for a transition.

Securities and Advisory Services offered through Cantella & Co., Inc. Member FINRA/SIPC.