Success and Succession E-Book

Eric Hehman

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 360

Veröffentlichungsjahr: 2015

Beschreibung

An insightful look at leadership transition from the successor's perspective

Success and Succession examines the leadership transition process from the successor's point of view, and outlines the considerations and strategies that lead to a better future for the business. With a focus on practical planning and execution, this insightful guide provides insight into the strategies that smooth the transition and help the new leadership make better business decisions. You'll learn when and how to start planning, who you need on your team, and the obstacles you should anticipate along the way. You'll learn to navigate the uncertainty the process entails, and how to identify opportunities for reciprocal understanding and adopt workable approaches for successful resolution of a multitude of transition issues. Interviews with those at various stages of transition highlight the real-world application of these ideas, and give you an inside look at what worked, what didn't, and what they wish they had thought of.

The transition of leadership in an independent, non-public professional service business can be emotional and difficult for everyone. This book gives you a framework for smoothing the process and driving the best possible future of the business.

• Consider the complexities of succession and transition
• Balance conflicting dynamics of outgoing and incoming leadership
• Plan for operational, financial, and emotional obstacles
• Develop and execute a winning strategy for long term success

The transition from founder to successor is far from an academic exercise, and is not linear. Answers are hard to find, and the ebb and flow of the process requires patience, creativity, and willingness to try again. Success and Succession provides a unique strategy for success, from the perspective of incoming leadership.

Leseprobe

Table of Contents

Title Page

Copyright

Dedication

Acknowledgments

Introduction

Section I: Operational Challenges … and Solutions

Chapter 1: The Founder as the Sun

The Evolution of a Founder-Centric Firm

Is My Firm Founder-Centric?

Awareness

“The Painters”

Chapter 2: Replacing the Sun: A New Solar System

What Road Do You Choose?

Committing to the Road Less Traveled

Assessing the Client Experience

Welcome to McDonald's: May I Take Your Order?

Human Capital Framework

Improvement Matrix

Chapter 3: Ordering Off the Menu

Choices Have Consequences

The Easiest One

The Great “Current Income” Debate

Equity versus “Milking”

What Does a Successor Want off the Menu

Not Everyone Is William Wallace

Chapter 4: Setting a Vision, Together

STEP 1: Can We Work Together?

Step 2: Setting a Vision

Section II: Financial Challenges … and Solutions

Chapter 5: It's Always About the Money

An Ironic Twist

Management versus Equity

Value and Control

Distribution of Value as a First Step

The Founder's Financial Dilemma

The Successor's Financial Dilemma

Building for an Exit Doesn't Maximize Value

Hope Is Not a Strategy

The Great Risk Divide

Chapter 6: Splitting the Pies: Defining What Is Enough

Only One Thing Really Matters

Four Big Questions

Defining an Exit Date

Successor Concurrence

Non–Operator Owners

Mandatory Sales/Retirement

The Pie-Slicing Exercise

Slicing the Equity

Slicing Up the Cash

Avoid the Path to Neutral

Defining What's Enough—a Real Case

What a Successor Should Ask For

Chapter 7: Let's Make a Deal

Discounting Is the Name of the Game

External Capital

Lessons from Other Professional Services Businesses

Today's Landscape

It May Be Time to Consider a Sale or Merger

What Drives Value?

Is the Firm Still Just the Founder?

Is Your Firm Strategic?

Successor Considerations in a Merger or Acquisition

Been There; Done That

Why Deals Don't Get Done—or Shouldn't

Section III: Emotional Challenges … and Solutions

Chapter 8: It's Not Just an Office

Know Your Personality

The Office

Successor Surprises

The Fear of Being Wrong

Successors Don't Want to Admit Being Scared

It's Not a Light Switch

The Slow-Motion Effect

An Unfair Expectation: Successor as Advisor

Progress, Not Perfection

Chapter 9: Breaking Inertia

Do We Have an Inertia Problem?

The Four Choices

Is Doing Nothing a Risk?

How Does This Process Start?

Can the Successor Start the Process?

The Homework Assignment

Successors Should Ask Hard Internal Questions

Going All In

Showing Progress

Starting in the Future

What's Next?

Chapter 10: Derailed

The Fear of Failure—Again

Founderitis

Life After the CEO Job

Term Limits or Planned Rotation of Roles

Optimism Bias

Reality Distortion Field

Hitting the Pause Button

Necessary Endings

Chapter 11: Building a Legacy

What's in a Name?

What's Your Title?

Memorials

The Finest Legacy

Some Final Words

Bibliography

Supplemental Material

Client Touchpoint Exercise

Client Touchpoint Exercise

Human Capital Framework

Human Capital Framework

Role Transition Matrix

Role Transition Matrix

Pie-Splitting Exercise

Pie Splitting Exercise

Interviewee Biographies

About the Authors

Index

End User License Agreement

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Guide

Cover

Table of Contents

Introduction

Operational Challenges … and Solutions

Begin Reading

List of Illustrations

Chapter 2: Replacing the Sun: A New Solar System

Figure 2.1 The Operational Assessment Process

Figure 2.2 Assessing the Client Experience

Chapter 4: Setting a Vision, Together

Figure 4.1 Alignment Hurdle

Figure 4.2 Priority Matrix

Figure 4.3 Delegation Diagram

Figure 4.4 Shared Vision Sequence

Chapter 6: Splitting the Pies: Defining What Is Enough

Figure 6.1 Equity and Cash Exchange

Figure 6.2 Founder's Financial Life Cycle

Chapter 8: It's Not Just an Office

Figure 8.1 Risk Diagnosis

List of Tables

Chapter 3: Ordering Off the Menu

Table 3.1 The Role Transition Framework

Supplemental Material

The In-Office Meeting

Outside-the-Office Meeting

Consistent Communication

Social Meetings

The In-Office Meeting

Outside-the-Office Meeting

Consistent Communication

Social Meetings

Equity Value: What's Been Created

Equity Value: Future Value Created

Cash Splits

Equity Value: What's Been Created

Equity Value: Future Value Created

Cash Splits

Success and Succession

Unlocking Value, Power, and Potential in the Professional Services and Advisory Space

Eric Hehman, Jay Hummel, and Tim Kochis

Copyright © 2015 by Eric Hehman, Jay Hummel, and Tim Kochis. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, [phone], fax [phone], or on the Web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, [phone], fax [phone], or online at http://www.wiley.com/go/permissions.

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

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Library of Congress Cataloging-in-Publication Data:

Hehman, Eric, 1974-

Success and succession : unlocking value, power, and potential in the professional services and advisory space / Eric Hehman, CFP, Jay W. Hummel, CFA, Tim Kochis.

pages cm

Includes bibliographical references and index.

ISBN 978-1-119-05852-6 (cloth) ISBN 978-1-119-07148-8 (pdf) ISBN 978-1-119-07135-8 (epub)

1. Executive succession. 2. Consulting firms–Management. 3. Business enterprises–Management. I. Hummel, Jay W., 1979- II. Kochis, Tim, 1946- III. Title.

HD38.2.H44 2015

001–dc23

2015019101

Cover image: Old Rusty Locks ©iStock.com/JuhaHuiskonen

Cover design: Wiley

To those who will strive to be the next generations of leaders.

Acknowledgments

Eric Hehman: To my wife, JayLeen, who has been the biggest blessing in my life and truly is my better half. Her confidence in me is unwavering and propelled me to take my initial job at Austin Asset as an unpaid intern. To my four young children: my hope is that someday, when they read this book, they will gain a deeper insight into their dad and know that even one person can make a difference in this world. To my parents, Curtis and Kathy, who modeled persistence and loyalty and inspired me to understand that slow and steady does win the race.

This story would not be possible without John Henry McDonald. His mentorship and partnership fueled my courage to be the leader I am today. To my partners at Austin Asset, Greg Van Wyk and Jonathan Davison, and our colleagues at Austin Asset, for joining me on this journey of building a business that we are all very proud of.

I am grateful to be surrounded by many wise mentors who challenge me to step beyond my limits: Larry Fehd, Tony Budet, Mark McClain, Jim Craver, Chris Hurta, Dave Helms, Rick Rhodes, Matt Burns, Trey Halbert, Matt Livingston, Jonathan Huffman, Mike Tipps, and Jeff Brown, when I needed your counsel, you were always there. Bits and pieces of each of you are in this book. To the members of my study group, Xcelsior, for their incredibly helpful constructive feedback over the last 10 years.

The beauty of a project like this is learning from your coauthors and being affirmed by their shared insights. Tim has been a mentor from afar for many years. Whether he knew it or not, his sharing of his experience with a young kid from Texas was a real help to me. And to Jay, that infectious spirit of enthusiasm whom I met four years ago. Our minds raced to the adventures we might share one day. One day has come, my friend.

And, finally, I am deeply grateful to the clients I have learned from and served along the way. Your trust has been an enormous honor, and I hope that I can repay that gift by helping to build even a better way to exceed your expectations.

Jay Hummel: My wife and I like to call our family “Team Hummel.” I could not have been blessed with better teammates than my wife, Valerie, and our two sons. Valerie's a rock star. She took care of a newborn and a two-year-old while I spent the weeks out of town doing my day job and most weekends at the neighborhood Starbucks trying to write. Her support never wavered, and if this book makes an impact, she's a big reason why.

I'm thankful for my friends Woody Taft, Jim Stengel, James Zimmerman, and Jim Bechtold, who inspired me to write this book when most people thought it was crazy. Thanks to Rob Densen, who challenged us on the original name of the book and graciously provided us with our final title. Chris Tankersley stepped up every time we asked him to help on draft formats even with unreasonable deadlines.

Tim agreed to write a book with two guys he barely knew. Thanks for taking a chance on us, Tim. We had a blast doing this together.

Last, thanks to my colleagues and friends at Envestnet, an amazing company with special people. Thanks to Jud, Bill, Jim, Zachary, and Lincoln, whose support of this effort has and will make a lasting difference.

Tim Kochis: Let me begin as close to the beginning as I can and thank my wife, Penelope Wong, not only for her patience and key advice throughout the effort to write this book but even more for her being at my side, every day, for the past 35 years of my professional career. I am also eager to acknowledge my colleagues at the old Kochis Fitz and the new Aspiriant for giving me the opportunity to experience these transitions of management and ownership, in very real terms, firsthand. With a few struggles here and there, the outcomes have been very good for me, and, I hope, even better for them.

Finally, I am eager to acknowledge Jay and Eric for the genuine pleasure of collaborating on this book. We weren't sure how a three-way responsibility for telling this story would play out, but we all quickly fell into comfortable patterns of contributing ideas, initiating drafts, negotiating differences, and editing to a final result, unified by a common purpose. We sincerely thank the many friends and industry colleagues for their wisdom and guidance in refining the views we present here. We owe them a huge debt for their gracious counsel, but take full responsibility for the miscues and inelegancies that may remain.

Most important, we thank and acknowledge the thousands of clients we have served and are serving, and the many more to come. Without them, there would be no reason to write this book. Fundamentally, this book is about them—and for them.

Introduction

This book grew out of an industry conference in 2013 in Dallas, Texas, hosted by financial industry journalist Bob Veres. Bob had asked Eric and Jay to come to Dallas to take part in a panel discussion, which he called the first of its kind, focused on successors talking to founders about the transition issues they faced in their businesses—from a successor's point of view. At the time, Jay was 33 and the president and chief operations officer (COO) of a large registered investment advisor and Eric was the 38-year-old chief executive officer (CEO) of Austin Asset.