In an earlier article, I wrote about taking responsibility for planning for the succession of our personal and business affairs and threatened that Maureen McKay and I would write subsequent articles to explore this topic.
I am going to start part two of our series by telling you a story.
Back in the days when Maureen and I worked together and trolled for clients who needed help with business succession, we attended a meeting to pitch a wife and husband who owned a successful business. I will call them Sam and Sue, mainly because I do not remember their real names.
After a lengthy discussion, Sam said to me, “Murray, you can do things that my existing law firm cannot do.” I asked him who his corporate counsel was, and he named one of Canada’s largest law firms.
With my inner voice, I said to myself, “I kind of doubt that.”
With my outside voice, I asked Sam, “Why do you say that?”
Sam replied, “Because every time I ask my lawyer about business succession, he sends over a tax plan. You and Maureen are the first lawyers who ever asked me detailed questions about my family.
Sam and Sue had us in for two meetings but did not hire us. I never found out why, but I sensed that Sam liked us but Sue, who was a lawyer, was set on going with a larger firm. That is all fine and good. In this line of work, it is important to hire advisors with whom you can establish a great personal connection. You win some, and you lose most.
We asked many, many, questions of Sue and Sam. Here are just a few to give you an idea:
- Do you have enough money outside of the company to be able to retire comfortably, if your children run the company into the ground?
- Should you be selling to a third party instead of turning the company over to your children?
- Are your children capable of doing everything that the two of you do? If not, what is your plan? Can they be trained? Do you need to bring in professional managers?
- If the company is to be turned over to your kids, what will their respective roles in the company be? How did you make those decisions? Was it based on a serious evaluation of their skills or on cultural considerations inherited from previous generations?
- How do your children get along? If they do not get along well, what makes you think that things will change when they become partners?
The point? This is custom work. It is not a job for your typical corporate or tax lawyer who is high on technical intelligence and low on emotional intelligence. And it certainly is not for inexperienced advisors relying on artificial intelligence.
Next time, I will tell you why family business succession is a team sport.
This article was originally published by Law360 Canada, part of LexisNexis Canada Inc.