It is not uncommon for an owner/founder to desire to remain active in the management of the company after a transition. After all, the firm has been their passion and life’s work – it’s also closely tied to their personal identity. Oftentimes, without the daily stimulation of being active in the business that they nurtured for so many years, they may feel as if their life has less meaning.
In such a situation, it is unrealistic to believe that company management would simply be handed over. If the owner/founder is to receive payments after the transition, their involvement is even more assured. The succeeding owner must take these things into account to ensure their own plans and expectations are balanced with the comfort level of the departing owner.
A well-thought-out post-transition plan can allow the successor(s) and the owner to coexist while transitioning increasing amounts of responsibility. As an owner, you must afford the successor with the necessary room for making management decisions without excessive interference.
Succeeding Owner Responsibilities
After a period of shared day-to-day management responsibility has passed (the correct length of which varies from company to company), the owner can continue to play an important role in the company in a capacity that may include:
- Maintenance of long-time relationships with important clients, bankers, and others
- Helping with special projects, joint ventures, or expansion plans
- Handling key client problems and complaints
- Providing guidance in the formation of long-term strategic plans
- Providing ongoing mentoring to assist the younger-generation management team to develop
There are several options for the owner to continue to serve the business in the capacity described above. The owner may decide to serve as an outside consultant to the business, play a role on the company board of directors, or serve as the head of an advisory board which reports to the CEO. It is sometimes helpful if the founder’s continuing role is spelled out in a letter of agreement prior to the succession plan being consummated. Such a document may address terms and conditions such as:
- Required availability of the founder for a defined transition period to work on defined tasks
- Descriptions of the founder’s and others’ specific roles pertaining to the defined tasks
- Fees and expenses
- Use of company property and resources
- Appropriate contact with company personnel
A smooth transition between owner and successor is ultimately what is best for any company. Managing personalities, emotions, and expectations can only be achieved with open and honest communication. Don’t hesitate to involve a professional therapist or business coach to assist with the process and make it as seamless as possible.