A founder with two adult children faces the classic question: pass the company to the next generation or sell and distribute the proceeds. Dave and Harry unpack how to evaluate successors, build a real leadership bench, separate roles from rights, and design governance that protects both relationships and enterprise value.
What You’ll Discover Today
- A simple framework to decide between succession and sale without torching family dynamics.
- How to test readiness of next-gen leaders with real responsibilities, rotations, and outside work.
- The management hires that change the math on value and optionality.
- Why distributions, incentives, and governance must separate shareholder rights from employee roles.
- Practical ways to shore up finance and HR before any transition.
Key Topics Discussed
- Communication before decisions: Align parents and adult children on goals, roles, and timing. Don’t spring a sale or a promotion.
- Capability checks: Rotate next-gen through key functions, set measurable targets, and insist one child works elsewhere first.
- Scale drives structure: At 20 to 30 million in revenue you need a real exec team. That creates options like a management buyout.
- Outside mentors without undercutting: Bring seasoned executives who coach next-gen and still respect the founder’s role.
- Governance that prevents fights: Board or advisory board with a savvy banker, clear distribution policy, and incentive plans tied to performance.
- Professionalize the back office: Fractional CFO for three months to normalize financials, then PEO or HR consultant to clean up HR, payroll, and compliance.
- Growth as a teacher: Use small acquisitions as a proving ground and value accelerator, with structured participation for the next generation.
- Founder financial planning first: Health, lifestyle, and risk coverage before succession steps. Set expectations with real numbers.
Quick Checklist You Can Use
- Define your objectives for wealth, risk, and legacy in writing.
- Map a 18 to 36 month readiness plan for successors with rotations and KPIs.
- Hire at least one senior operator and a fractional CFO now.
- Stand up an advisory board and formalize a distribution and incentive policy.
- Decide your default path with a trigger: inside succession if targets are hit, market sale or MBO if not.
Links and Resources
Call To Action
If you are wrestling with the founder’s dilemma, get objective eyes on the plan. Book a call, tighten your governance and finance, and create two good options instead of one risky bet.
