The Founder’s Final Act

Succession planning has been called “the last act of a great CEO.” That act is infinitely more complex if the CEO is also the owner and founder of the company. When that’s the case, the decision about who will own the business next is a profound one.

This is not just an issue faced by mom-and-pop businesses. During the past two decades some of the world’s most high-profile companies have been founder-led, including private firms like Chick-fil-A, Menards, Enterprise, and Love’s and public companies like Meta and Nike.

No single solution will be appropriate for them all, so it’s crucial that founders go through the process of defining what success means to them, understanding and exploring the potential pathways for achieving it, and then, ultimately, deciding on a plan. By starting this journey early, founders can make the most of their final act.

Beyond the problem that company owners are always busy, making transition plans can be difficult for two main reasons.  First, very human emotions are triggered by the process.  Second, ownership decisions have major consequences for families, which have follow-on implications.

According to the authors, the best outcomes come from a structured, intentional approach that moves through four key phases:

1. Define Your Legacy.  Start the ownership transition by thinking about what you value most and how you want to prioritize the outcomes for five main categories of stakeholders: you, your family, your employees, your business partners (customers and suppliers), and society (both locally and globally).  It’s particularly helpful to first identify what is not essential for your legacy and cross out the outcomes that are not important to you. Then you can take your refined list and divide the stakeholder outcomes into three categories: must have, nice to have, and less important.
2. Explore Your Options.  Once you’ve determined your goals, you need to decide whether the best way to achieve them is by transferring the company to another long-term owner or through a liquidation or sale.  The company’s continued existence could be consider sa an obstacle, a lever or a vehicle to realizing their legacy.  The choices could be in line with this perception.
3. Experiment, Learn, and Formulate Your Plan.  After you’ve defined what success will look like, you can test your hypothesis about how a future ownership model will help you realize it. There is no one-size-fits-all solution. Two founders who want the same kind of legacy could choose very different models.
4. Execute the Plan—and Adapt as Needed.  At some point exploration must give way to decisions and action. Different transition paths demand different timelines. For instance, it can take founders 12 to 24 months to optimize performance, secure advisers, and find a buyer. And things don’t always work out.  To ensure a smooth transition, you should draft a detailed plan that outlines key milestones, responsibilities, potential risks, and metrics for tracking progress. A good plan will prevent critical elements from slipping through the cracks and allow for necessary adjustments along the way. Next set up regular checkpoints.

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