6 ways to avoid a succession head fake that kills the deal

One of my fondest memories growing up was watching the Peanuts specials with my father. While we laughed at the fact that Charlie Brown always got faked out by Lucy with the football, pulling it out from him just as he was about to make the kick, we both felt bad for Charlie Brown. He was so earnest and wanted to make the kick, be in the game, and have fun.

This scene came rushing back to mind this week as I talked with Steve, a key leader in a professional services firm. Steve has been with the firm for many years and most of his career. The firm has a sole owner, Greg. Eventually there will be a change in ownership when Steve’s boss retires.

Greg approached Steve to discuss his succession plans. Greg wanted to gauge whether Steve might be interested in taking over the firm. Steve was excited about the prospects of ownership. Being in his late 40s, it was good timing. He had plenty of runway and energy left in his career and, with that timeframe, Steve could readily pay off a 10-year buyout plan and still have time to maximize his own earnings, cash flow, and retirement savings.

Steve channeled his energy into the business, upping his game and developing strong relationships with customers and referral partners. His project sales increased to the point where over 75% of the new business was due to his sales, project management, and reputation. At the same time, he was earning a reputation in the community, he was demonstrating his commitment and contribution to the company, and likely improving the valuation of the firm.

Time moved on. Greg made side comments along the way, but never engaged in deep conversation about preparing for succession. Greg lived in his own world. With Steve effectively running the operation, he could enjoy the fruits of the company and its reputation in the community. If conflict arose, Greg retreated and avoided it, which often left Steve hanging as Steve attempted to keep the rest of the team on track.

More time elapsed and still there was no conversation. Crickets.

Now, almost seven years later, Greg raised the question to Steve again. Would he be interested in buying Greg out?

Understandably, Steve’s head hurts. He’s angry. He’s seven years older. By the time he paid off the buyout, there would only be a few years until his traditional retirement age. Time that could have been used to transfer critical knowledge on ownership, such as the financials, insurance, employer obligations, and other responsibilities Greg still held, has been squandered. Teamwork among colleagues is at a low due to Greg’s lack of leadership and ability to hold others accountable. Meanwhile, the value of the firm grew. Greg is not the type to recognize that Steve’s sweat equity was the primary driver of that growth. Steve will be expected to pay market rates, adding salt to the wound.

And what if it’s another fake play, with Lucy moving the ball at the last minute?

Unfortunately, scenarios like this play out every day in business. Management and owners see potential in the next generation and want to dangle carrots in front of them to retain them. These next-generation leaders are excited for the opportunity, hungry to prove themselves, and want to stretch, grow, and thrive. It has all the hallmarks of a win-win. That is, until the ball moves, whether intentionally or unintentionally.

With the dynamics of the labor market these days, businesses can not afford the fake plays. If a future leader is identified, or in Steve’s case, future owner, those in a position to act need to take these six steps to ensure that the win-win play is made:

Clarify your commitment

Dangling carrots, or placing the football on the tee for kicking, demands a commitment to the play. If you’re not serious about moving forward, acknowledge that — first to yourself, and then potentially to the other party. For example, had Greg been transparent with Steve by telling him that he wasn’t ready yet but just wanted to gauge Greg’s interest and would commit to continuing to talk through plans that would help them both become more ready over time, they would be in a completely different situation today.

Map out the play ahead of time

Before muttering word one to the next generation leader/owner, it is vital to have a clear sense of the path forward. Define:

  • What is the opportunity?
  • What is required of both parties?
  • What steps need to be taken to achieve the goal?
  • What is the timetable and what are the key milestones?
  • What are potential questions or details the party would want insight to?
  • What flexibility is there in the plan? Are there options or contingency plans that can be explored?

Write it down. Clarify it, for yourself, in black and white, on paper. This will inform, better prepare, and ground you for your conversations.

Prepare to share

Preparing to bring someone new into the leadership or ownership circle requires a willingness to share and entrust information with them that they have not been privy to before.

Letting someone in on the financials, even at a summary level, may make you understandably uncomfortable. Yet the other person can’t make an informed decision without it. Consider ways to help bridge that discomfort and sharing of the information. Also, reinforce the sensitive nature of the information when providing it to the next generation leader. (Think about having them enter into a confidentiality agreement if they haven’t already.) If the next generation lacks financial background, this is a prime opportunity to help them learn more about how the business makes money and how to read the reports (which is, in my opinion, helpful regardless of the path forward).

Have the conversations

Talk to the candidate and explore how they feel about the opportunity and your ideas as to what the path forward might look like. If there is hesitancy, be open in hearing the person out. Ask them to help you develop and finalize the plan forward (rather than handing it down like tablets from on high.) The more you work together to develop the plan, the more buy-in and likelihood of success.

Recognize and share the fact that the growth and succession process take time. It requires multiple conversations. Jointly commit to a schedule for the next discussions and stick to it.

Assess progress and retool the path

As a part of the routine, scheduled conversations, provide for time and resources to assess your individual and collective progress on the plan. If things have fallen off track, discuss what happened and why, with minimal judgment. Reasons may range from other demands on time to personal roadblocks, both of which deserve to be acknowledged and discussed. As things evolve, discuss and update your plan and respective “to-do” lists together.


Communication is inherent in each of the above steps and deserves its own section.

Communication, or lack of it, is why Steve and Greg are where they are right now. Instead of Steve being ready to take the leap, he’s upset, disenchanted, and seriously thinking through all his options. Greg, rather than having a solidified succession plan, may find himself without his top guy. If Steve leaves, the firm may have a much lower value and sell for less than Greg had hoped and planned for.

What could have been a win-win may end up as a win-lose. Time will tell which direction Steve and Greg go. Steve will land on his feet either way. He’s that type of a professional and has time on his side.

Greg has less wiggle room. In fact, through his own actions and inaction, he’s become Charlie Brown when the ball is moved just as he wants to make the kick.

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