In the community association management (CAM) industry, succession planning is one of the most important—and most emotional—decisions a business owner will make. For many founders, the ideal scenario is to see the company they built stay in the family, with a son, daughter, or other relative stepping into leadership. These legacy leaders carry the founder’s name, values, and vision into the future.
But while a family succession can be a rewarding way to preserve a company’s identity, it also comes with unique advantages and challenges. How you go about the development, integration and transition your legacy leader is the key – it can work but it can also erode family relationships, result in distrust, and even hurt your business.
A few things to consider as you develop your family transfer strategy:
- Does the legacy leader actually want the business, or do you just assume they do?
- Do you expect/need the legacy leader to “purchase” your interest in the company or is it a gift? Do they know this? Do they understand the price and can pay it?
- What skills does your legacy leader need to be successful when you are gone and do they have them? Do you can teach them, or would it be better for them to get the skills outside of the business?
- What role/s will your legacy leader serve until you are ready to step down? This clarity is important for you, them, and the entire company. It’s important for the role to be specific and include not just tasks but responsibilities, authority, and structure.
- What milestones/successes are necessary for the legacy leader to achieve? How will they know they are ready or are making progress towards you feeling comfortable with existing the business? Consider key accomplishments tied to the business’ goals (e.g., develop and implement a marketing strategy to increase new associations by 20% over the next 18 months or lead and develop expansion into a new geographical market).
- Who will mentor the legacy leader? Having someone other than you giving them advice, insights and guidance is important as is developing a way for team members to give feedback to someone other than you.
- How will you integrate the legacy leader into the company? This isn’t just about your exit strategy but about your responsibility as a servant to both your family and the company. To be successful you must commit to ensuring that the new leader is properly developed to lead. That involves time, lots of communication and honesty. Family relationships can complicate decision making. If the legacy leader isn’t right for your needs or the company, you need to be good with the impact of that on your family. If employees or clients feel the successor was chosen solely due to family ties rather than merit, it can impact morale and trust—especially if the leadership transition is not handled transparently. Having a back up plan is a good idea.
When done thoughtfully, passing a community association management company to a family member can preserve its legacy while positioning it for future growth. At Keystone, we believe the most successful transitions happen when tradition meets preparation—where the next generation is ready to lead not just because of their name, but because of their proven ability to guide the company forward.
If you’d like more information about how Keystone could help with your exit planning reach out to Loura who is a Certified Exit Planning Advisor, at lsanchez@keystonepacific.com or 303-522-5823.