January 5, 2023
The popular television series “Succession” is much more than an entertaining tale of nepotism and corporate scandals, it is a cautionary story on succession planning and the pitfalls that can ruin a family-run business. For those who have not yet seen Succession, the show follows the Roys, a wealthy entrepreneurial family that manages a global media empire built by family patriarch Logan Roy. Across Succession’s three seasons, Logan struggles to plan for the future of his company, Waystar Royco, and the decision of who should take over management once he is out of the picture. Regardless of whether you run a Fortune 500 company or a small, local business, determining future operations and management of your company can be difficult, especially when family is involved. As such, here are some of the dangers to look out for as you consider your own succession planning and family transitions.
One of Logan’s greatest flaws is his inability to accept limitations and the reality of the future. Logan is like other business owners who, after working for decades to grow a business, do not plan for retirement or wish to give up their position of leadership. While some people may believe that they will be able to work into old age and avoid retirement, life can sometimes be unexpected. Illness, accidents, or other unfortunate situations, including an untimely death, may lead to a transition of management or ownership sooner than expected. Not to mention, outside circumstances like a pandemic or economic recession can also lead to unforeseen problems. Coming up with a succession plan before the necessity arises can alleviate stress and uncertainty; it is often better to be proactive rather than reactive. This could involve buy sell agreements to facilitate a transition and/or estate planning aimed at transferring business ownership to one’s descendants. Thinking about future transitions within the family business can be done more easily when those in power are healthy, capable of planning and willing to do so.
Establishing a process of transition is not always easy as it may require a lot of consideration and time to implement. Nevertheless, failing to create a plan could be more problematic if a lack of preparation creates division within the family and ambiguity about the future. This issue comes up on Succession quite often as siblings Kendall, Shiv and Roman vie for their father’s favor in the hopes of being appointed as CEO of Waystar Royco. While Logan dismisses the notion that a plan would help the company run smoothly, he fails to realize that his hands off approach leads to distrust, frustration, jealousy and resentment amongst his heirs. Coming up with a plan may prevent hurt feelings, hostility and undesirable competition amongst relatives. Articulating a plan of succession may also help shareholders, employees and family members feel confident in the future of the business and their involvement in the company. Without a plan, those who are most loyal to the company will not know where they stand and may lose faith in the business and its value altogether.
Another important theme from Succession is how the Roy children believe they are entitled to run the company because of their relation to Logan. Simply put, ownership or involvement in a family business should be seen as a privilege, not a guarantee. Gradually teaching the younger generation about the business and allowing them to work their way up the company ladder over time can lead to better preparation for the future, instead of putting one’s relatives into a position for which they are unqualified. Promoting family members who lack experience can send the wrong message to other employees and may lead to division internally. Creating a plan for one’s descendants to buy into the family business over time can help prepare not just the future owner, but the current owner and other employees as well. Communicating intentions and expectations early on may also help one’s heirs feel less burdened by the responsibilities of business management/ownership when they eventually take over. Regardless of familial relation, successors in business should train and work for their position, thereby ensuring they are qualified and willing to assume the role.
Favoritism, overzealous control, lack of communication and improper planning may lead to issues for business owners, regardless of the industry or the size of the company. For those that approach future planning proactively and timely, they may be able to rest a little easier when it comes time to pass the torch to the next generation. Don’t wait to establish a plan like Logan Roy; consider a transition for the future with careful business strategies and estate planning tools. And if you have some time in the coming months and are looking for a new show to binge, Succession may just be worth a watch. Particularly if, like me, issues related to business and future planning are of interest to you. The show’s fourth season is set to debut on HBO in Spring of this year.