How to pick a successor

Some business owners are in either an enviable or perhaps troublesome position of having family members who may wish to take over a family business. We say enviable because who would not want to leave one of life’s most prized assets — the business we created — to an heir? We say troublesome because sometimes there is more than one heir interested, or worse perhaps, the one most able to do the job is unwilling while the one most willing is less able.

A few years ago, as I was nearing 50 years in the financial services profession, I knew that I had to make a succession plan. My husband had joined me in the firm over 30 years prior but would not stay on after I retired. Our daughter is a retired professional ballerina and now is running a hugely successful worldwide business of her own. Our son is a playwright and not at all interested.

Our son-in-law is a gifted professional photographer and not game. And I am too old to wait for the grandchildren who are still in elementary and middle school.

As a relatively well-known financial planning firm, both locally by reputation and nationally through my broker-dealer, we have had no shortage of suitors. But many would have been adding our substantial client base to their own, and I had some doubts about whether our clients would receive the same level of services they have come to expect by working with us.

Some would have required us to have our clients move to a new broker-dealer who might not be ideal. Some were not locally based and might only manage remotely as compared to our in-person model.

I had always stated that there were three primary groups of people I was considering with a succession plan: my family, who deserved to reap some financial security from my long career; my firm’s team of associates, who should not have to retire just because I did; and my clients who, like family, were terribly important to me and for whom I wanted a smooth transition.

Some years ago, I tried a transition with a person I had known for some time, and it was not a success. I knew that the next effort had to go much better.

The first thing that I decided was important to do was to pursue multiple options at the same time. My husband and I were pursuing these together as his well-being and knowledge of the possible transition’s success was terribly critical. Our broker-dealer had many seminars and workshops on the topic, some of which added value, and they also had processes developed for transactions of this nature.

By January 2022, we had three serious suitors: a regional bank; a high-ranking, multistate firm within our broker-dealer; and Madison businesswoman Joanna Burish, who was a financial advisor with Northwestern Mutual and has worked in commercial real estate development and in television, film, and music development, production, and distribution.

We began the lengthy process of evaluations (the third and fourth I’d done in the past 15 years after I reached age 60 and started thinking about succession). We kept meeting in person and by Zoom video with all three possible successors. It soon became clear that only one of the three wanted to be a true successor. That is, only Joanna was prepared to step up as a business owner, and while she might do things very differently from me in some respects, she would learn from me and see herself in a role like mine.

That made the decision very easy. While all three offered some special nuances, Joanna was seeking to merge her skills, her contacts, and her talents with mine and to work with me over a several-year period to make the business first ours and then hers. The connectivity we felt from day one — knowing one another for over a decade, but honing the relationship over the past 16 months — has been palpable. It may not be important that everyone find a person to be a successor with so much commonality, but I cannot believe that anyone would find that to be a negative. For some, it might be the so-called frosting on the cake, but I believe for Joanna and myself, it’s baked into the batter.

Therefore, rather than a lot of checklists and charts and to-do lists, it seems to me that the process of picking a business successor for a closely held business entails finding someone with whom the communication is so strong, and the relationship is so close, that you find yourself knowing that the other considerations you value in the entire equation — your family, your team of associates, and your clients — will also feel that same connection.

When that person happens to come with excellent business and communication skills, a background of significant successes in many varied business endeavors, and a holistic approach to financial planning born from a shared style forged on empathy, the match seems to be one destined for success.

Betty Harris Custer is a managing partner in the firm Custer Burish Financial Services. She is in the process of transitioning ownership of the firm to fellow Managing Partner Joanna Burish.

Betty Custer is a registered representative of Lincoln Financial Advisors Corp. Securities and investment advisory services offered through Lincoln Financial Advisors, a broker-dealer (member SIPC) and registered investment advisor. CRN-5487787-02282