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The Cha Cha of Succession

Written by Exit Planning Institute | Oct 21, 2024 3:00:00 PM

Amy Wirtz has always worked with families. With a background in collaborative law, she spent many years helping couples find amenable family solutions as they ended their marriages. She’s tapped into this same skill set as an exit planner. Today, as a Certified Exit Planning Advisor (CEPA), she guides family businesses as they transfer leadership and ownership from one member to another, often from one generation to another. While exit planning can be complex in any business, family businesses can offer an added layer of difficulty thanks to family dynamics. Wirtz likens the transfer of a family business to a dance, commonly referring to the transition as the “cha-cha of succession.”

She explains that the Value Acceleration Methodology is linear with its gates, phases, and steps. While this is necessary to provide a framework for exit planners and owners, most transitions don’t start at A and end at Z—just as a dance rises and falls in intensity before reaching its conclusion.

“Humans don't work that way, she says. “So when I'm explaining the process of the work with owners, I explain how they’ll make progress and then backtrack before making progress again.”

In family businesses, the transition dance often looks like this:

  • First-generation owner steps back, taking less of a central role.
  • The second-generation owner makes changes.
  • The first-generation owner gets pulled back into the work, either because they are passionate about the work being changed or their guidance is needed.
  • The second-generation owner may or may not welcome the first-generation owner stepping back in.
  • And the dance begins.

These dance moves happen because a family business transition—just like the cha-cha—involves multiple steps: forward, backward, sidesteps, and the rock step. And just because the choreography may be surprising doesn’t mean it’s not ultimately helpful in finding an appealing end.

“As exit planners and advisors, we have to help owners and family businesses plan their next steps,” says Wirtz, “but also come alongside them when they backstep or sidestep—because they will.”

The Art of Listening

Wirtz says patience is integral to the dance—literally and figuratively. It takes time to learn new steps, routines, and boundaries. To help her clients do that, Wirtz leans on an essential but often undervalued skill: listening.

“As an exit planner, the number one thing you must be good at is listening. You have to be able to hear the pain points and the opportunities that owners are presenting—even if they don’t realize they’re presenting them,” she says. “So listening means more than just with our ears. It means with our eyes. It means with our heart. It means with our brain.”

Wirtz warns that exit planners must be attuned to listening to all family business owners.

“If you've met one family business owner, you've met one family business owner. You cannot have a box solution for humans,” she says. “You have to get to know each owner—what’s keeping them up at night, what's exciting them, what they dream about, what they’re afraid of.”

That input, she says, gives her a better understanding of how a family business manages its family, ownership, and leadership systems.

Learning the Dance Steps

From there, she can help set the path for transfer and exit—and growth.

Embracing the dance is scary for many families—both for those exiting and those taking the lead. Wirtz says a structured process like the Value Acceleration Methodology makes it all the less so.

“I break down complex transitions in a more approachable way, so we can get to the endpoint they desire,” she says.

Along the way, she helps the owners grow personally and professionally, embrace change, and work toward shared goals. That, she says, requires attention to detail. To master the cha-cha, you must be aware of where you place your feet, hands, and head, and in the same way, owners must be aware of their actions and how those actions affect the other family business owners.

Finding Your Rhythm

“The uniqueness about family business is they are balancing the preservation of their family entity and relationships along with the relationships and value of their business,” explains Wirtz. “If you go into business with your family, you’re putting money on the line, but you’re also putting your family on the line. That's what makes it so unique. But it's also the magic fairy dust that makes them so successful.” 

To get that something special and find your rhythm on the dance to succession, Wirtz helps family owners align the vision of ownership with the value inside the family, ownership, and leadership groups.

“It’s parallel planning—strategic planning for the family system and the business systems,” she says, “and they should be happening at the same time to ensure current ownership and next-gen ownership are moving in the same direction.”

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