Perfection is not attainable, but if we chase perfection we can catch excellence.
Identifying a successor and strategizing the future of the business is the hardest and most important decision a founder will ever make. The stakes are nearly as high for a successor. A decision on which firm and founder to tie their future to is probably the most important career decision successors can make. Given the very high stakes, it's important to understand the challenges and opportunities here. Getting this wrong on either side can impair career paths, deteriorate client relationships, and, ultimately, diminish the equity value of the firm.
This chapter comes just before we start the financial section of the book. This is no accident, largely owing to a discussion with Mark Tibergien. After seeing many firm transitions, his main cautionary note was a simple one: “In advisory services, if you haven't reconciled what the client succession plan is going to be and what the management succession is going to be, then there's no way you can resolve the economic (equity succession) question.” Firms can't have a client succession plan without a management succession plan. And the equity succession plan that sits alongside these can be either deliberately compatible with them or deliberately of its own design and at its own pace. In any case, for many firms it feels like a chicken-and-egg conundrum. Where do you start? Does it matter? We're convinced ...