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Financial Planning Insights

Succession Planning: It's All About Happiness

By Joe Maier and Bob Schneider | Johnson Financial Group • November 24, 2020

4 minute read time


Before starting a succession plan, it’s important to define the purpose of what succession planning is. The answer, while somewhat counterintuitive, is also very simple. A succession plan should maximize the owner’s happiness. Director of Wealth Strategy, Joe Maier, explains the purpose of succession planning and how a financial advisor can help clients plan for the inevitable transition of a business.

As someone who spends so much time working with business owners on succession planning, I am always amazed at how many different and sometimes inconsistent descriptions are used by professionals to describe what succession planning is.

For example, a quick Google search on succession planning or exit planning leads to the following descriptions:

  • A complex, advisor led process to determine how to transfer the ownership of a closely held corporation.
  • A system designed to minimize taxes in the transfer of closely held equity.
  • A collaborative, team-based approach to transition ownership at the right time to the right people.
  • A plan for the exit of an entrepreneur to maximize the value of his (yes—it says “his”) company.

In my opinion, none of these describe the “why” or purpose of the succession planning process. And that’s the most important thing of all.

First, it is important to understand why succession planning exists. The answer is that it is a simple truth. For every and all businesses, ownership and leadership will, in fact, transition to others. The underlying cause of that truth is a little something called mortality.

Second, given that truth, the current owner(s) has a choice: that transition can take place by chance or it can take place by choice.

When that transition takes place by choice, or as part of a succession plan, the owner can choose who will own or run the company regardless of when that transition takes place. And, of course, every succession plan needs to contemplate the possibility that ownership and leadership will transition before an optimal time and prior to the best circumstances. Again, mortality and the fragility of human life makes that a potential risk that needs to be thought through and managed.

But back to purpose.

What is the underlying reason that owners should have a succession plan? Many professionals opine that the reason to have a succession plan is to maximize the value of the business upon its transition. In my experience, that is a frequent goal. For example, if the way the owner chooses to transition ownership is to sell it to a third-party buyer, maximizing price is a consideration. But even when the exit strategy is an outside sale, oftentimes factors other than price dominate the structure. I have seen many business owners receive seventy to eighty percent of the possible purchase price by selling their businesses to buyers that contractually agree to keep the current team in place rather than strategic buyers who will terminate several employees to gain from economies of scale.

In those situations, it would be patently inaccurate and misleading to say that the purpose of the process was maximization of value. Other factors predominate. And when the transition is to other owners—for example, family members or the inside management team—frequently, success of the new owners predominates over value or price maximization.

So, as business owners consider what a great succession plan should accomplish, what should that purpose or mission be? The answer, while somewhat counterintuitive is also very simple. A succession plan should maximize the owner’s happiness.

And different people derive happiness in different ways. Some owners I have worked with see their business as an extension of their legacy, their story, and want their story continued to be successfully told by the people they care most about. For these owners, their happiness is achieved by transitioning ownership and leadership to the next generation. For others, their happiness is derived from “honoring” their employees who helped drive their economic success, and transitioning ownership to these insiders. And finally, for others, happiness is achieved by selling the business and reinvesting the proceeds in a way that allows them to accomplish their wishes, hopes, dreams and desires.

Simply put, it is all about happiness. And it is interesting that few, if any, advisors focus their value proposition on leading their clients to uncover and achieve client happiness. So a question for business owners: does your advisor know what makes you happy? If not, do you have the right advisor?

Let’s Start a Conversation

Interested in learning more? Contact us to discuss what will make you happy as you plan for the inevitable (transitioning your business) and make it your masterpiece.

by Bob Schneider

Bob Schneider specializes in providing clients with the educational information and tools necessary to make informed decisions regarding their financial planning goals. He uses his financial planning experience to help individuals and families plan for and enjoy their retirement years.


by Joe Maier

Joe has extensive experience helping high‐net worth individuals, family offices, business owners and corporate executives meet their wealth and legacy goals. His areas of specific interest and skill include business succession planning, financial and estate planning, and wealth transfer strategies.


The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial professional. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial professional. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.

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Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.