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How to avoid a succession disaster: Lessons from HBO's Succession

Business succession is a complex process that requires careful planning and execution. Peter Boolkah says CFOs play a critical role in ensuring a smooth transition, and they must be prepared to navigate various financial, strategic, and operational challenges.

How to avoid a succession disaster: Lessons from HBO’s Succession

How many CFOs have watched the TV show Succession and related to it?  The HBO hit has just closed off it’s third series which – spoiler alert – is a cautionary tale for CFOs who fail to plan for succession.

Whilst the show is dramatised, there are many similarities to real life and the role of the CFO Karl Muller. The fight for control of a company fraught with fallouts and unease is all too familiar.

Having worked across more than 15 business successions alongside many CFOs, the process of transitioning leadership and ownership of a company from one generation or set of owners to the next is never straightforward.

For CFOs in particular, getting caught in the middle of family disputes within these transitions is commonplace.

Statistics show that around 30% of family businesses make it to the second generation. From then on it halves to 10-15% making it to the third generation, and a staggeringly low 3-5% making it to the fourth. The figures are low because the process is complex.

The owner of a business is passionate about it. However, many children do not share their parents’ passion and see the business as either a poison chalice or a licence to print (and burn) money. What often happens is the parent steps down but does not step out of the business.

They give their son or daughter control of the business but not ownership of it. It is therefore still a parent-child relationship in a business environment which does not work. The control element of business succession is usually its main downfall. The current owner of the business will have spent years building and running it with their CFO alongside them.

Financial decisions will have been made following certain protocols and usually, the relationship between the current CEO and CFO will be one built on a mutual understanding of how the business works and a sense of making decisions based on a traditional and tested approach.

The next generation often comes into the business wanting to take it forward in a different way. This different approach can put a huge strain on the CFO as they have to navigate the often-choppy waters between the CEO and their successor.

Different business alignments 

During business succession, the CFO will be involved in strategic planning discussions related to the future direction of the company. They will have worked closely with the CEO, the board of directors and other stakeholders to develop a succession plan that ensures financial stability and growth. If part of the plan does not align with the successors’ ideas, problems arise.

I worked with one third-generation family holiday park, where handing it down completely failed; it split the family apart. The problem stemmed from a poor relationship between father and son. The mother left the family home when the children were young, and the father had sole custody but was quite often absent because he was running the business.

When the time came for the son to take over the business there was still a great deal of childhood resentment from the son towards the father due to his absence. This resentment meant that they had a challenging relationship at the time of the handover. The son felt controlled and unable to put forward his ideas for progressing the business. The father, his CFO and the stakeholders were adamant that the old way of working remained.

Despite much negotiation, the succession plan fell through. I worked with the father and his senior team to sell and exit the business to a third party rather than hand it down to his son.

Business succession often brings about changes in management structure and decision-making processes. The CFO must review and potentially revise financial controls, risk management strategies, and governance frameworks to ensure they align with the new leadership’s vision and goals. They may need to develop and implement new financial policies and procedures to adapt to the changing business environment.

In another business succession example, the son and daughter were working within the business already as directors and desperate to make changes. However, the father was still very much in control of the finances.

Situations arose where the son and daughter would ask the CFO to release money for legitimate business expenses and the CEO would veto it. This left the CFO answering to both parties as to why the release of money couldn’t happen. After three years of being caught in the middle, the CFO retired.  The succession went ahead; however, the business is struggling.

The strength of relationships

Successful business succession within a family can happen but it requires careful planning and execution and relies on the existing strength of the relationship between father/mother and son/daughter as well as the relationship between CEO and CFO.

The succession planning process should be started well in advance of the actual transition with the potential family member taking over the business identified years earlier. The hope is that they will have undergone training and development to prepare them.

One of the successful successions I worked on saw the son having worked in the family business from school and during that time he had taken on different roles within the business from the bottom to the top and understood everything about it.

It is also imperative that a business succession has external help from impartial advisors such as lawyers, accountants, and business consultants, who specialise in family business succession to help navigate complex legal, financial, and emotional aspects of the process.

I continue to work with a second-generation business in the UK called ‘Brentwood Communications’ run by James Miller who took over the business from his father in 2008. This is very much an example of a successful succession.

He has taken the original six-man business to another level. Brentwood Communications has now acquired four other businesses within its portfolio. Miller was lucky, his father led by example and despite the business being his baby, he ultimately understood that he had to take a step back and let Miller learn how to run the business his way.

Miller says he did not ever set out to run the business but neither of his siblings were interested and coming in to work in the IT part of the business ignited his passion for the business as a whole. In this scenario, there was a lack of egos and a strong senior team including a CFO in place, who had built a strong relationship with the successor.

Overall, business succession significantly impacts the CFO’s responsibilities and requires them to navigate various financial, strategic, and operational challenges.

Without a clear succession plan in place which has been carefully worked through years prior to the transition, it is likely it will fail. The success of a transition relies heavily on the existing relationships and values already in the business including that of the CFO and the successor.


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