It is hard to think of another television show that so vividly captures the issues and turmoil that can arise in a family business on the brink of a transition. Succession follows the Roy family as the children of Logan Roy battle for his approval and ultimately control over the family media conglomerate, Waystar RoyCo.
Logan Roy is suffering from declining health and his children all believe they should be the heir to the family business. However, Logan has no plans on exiting the business anytime soon. In the now four seasons of Succession, the Roy family faces almost every issue family businesses face.
Especially: what will happen to the family’s relationship once the business is no longer holding them together?
1. Are you prepared for the 5 Ds?
Exit planning helps business owners avoid an unsuccessful transition from their business due to one of what EPI calls the 5 Ds. These are Death, Divorce, Disagreement, Disability, and Distress. Unfortunately for the Roy family, they have experienced almost every one of these concerns. Without a detailed succession plan in place, Logan Roy leaves his children to fight each other for control, which ultimately hurts the business.
In seasons two and three of the acclaimed show, Waystar RoyCo and the various family members involved in the business are met with constant lawsuits, Department of Justice investigations, and other legal battles. Unexpected legal battles can take up much of a business owner’s already extremely busy workload. Whether from a competitor or an internal employee, a lawsuit can greatly diminish business value if not handled swiftly. Additionally, a lengthy legal battle can quickly reduce an owner’s reserved funds and result in bankruptcy or the business closing.
Good contingency planning includes risk reduction strategies and policies to protect against everyday disaster situations that lead to distress. These situations include but are not limited to, data breaches, property disasters, supply chain disruption, work safety incidents, legal battles, and critical employee loss.
Learn more about the impact of the 5 Ds on business value in our new content package.
2. Does your family have effective communication?
It wouldn’t be an HBO show without drama, and Succession delivers the drama in every episode. The majority of this drama is due to a lack of effective communication between the leadership team at Waystar RoyCo. This lack of communication leads to a lack of trust between family members and ultimately harms the value of the business.
Family businesses are bound to have more personal conflict due to the relationship between family members, but when the business is the vessel in which all personal disputes are managed, it does more harm than good.
By having annual family meetings to discuss the possible succession plans for the company, as an owner, you will be more prepared for an exit when the time comes. During these family meetings, any members of the family working in the business will have the opportunity to have their business suggestions heard. Those not working in the business will gain a deeper understanding of the inner workings of the business as well.
3. What is your transition strategy and is the family aware of it?
In the third season of Succession, the Roy family is approached by streaming media giant Lukas Matsson who is looking to purchase Waystar RoyCo. With the impending acquisition of the family business, Logan Roy’s children are upset that their path of succession has been cut off. While the Roy family is never without conflict, the very idea of losing the family business causes the children and would-be successors to the Waystar RoyCo empire to crumble into arguments.
Many family business owners face a common struggle when selecting a successor. Do I choose to keep the business in the family, even though the next generation is not qualified? Or do I choose a successor outside of the family and fail to continue the family legacy?
Questions to Ask Yourself After Watching Succession:
- Do you have a detailed succession plan in place for your family business and are all family members aware of this plan?
- Are you prepared in case one or more of the 5 Ds impact your business?
- Are you effectively managing partner disputes in your business?
- Do you have regular meetings to go over quarterly goals and understand who is managing each goal?
The Family Business Advisor
As a business owner, your family business advisor is a crucial member of your transition advisory team. They assist in managing collisions between the family and business dynamics. Selling the largest asset impacts the family. According to research presented by the Telos Group during our CEPA Online credentialing program, 95% of children who inherit a family business after both their parents pass will choose to leave the advisor who worked with their parents. This is a concerning statistic as it highlights the necessity for advisors to include the children in the family business discussions early on.
