Succession Planning: What Business Owners Get Wrong About Their Successor

I’ve just finished watching Age of Attraction on Netflix. It’s a dating show that pressure tests relationships where two strangers start dating without knowing each other’s age and then - gasp! - find out each other’s age once they’ve agreed to try living together.  

(Yes, this is a real show that I gave up 9hrs of my life to watch…)

Anywho, to say it was a wild ride would be an understatement.  There were eye-watering age gaps in some of the couples of up to 33 years.  But hey, who am I to judge??

I think one of the things (or maybe the only thing…) this show did well was illustrate how the goals and values of people who are different ages can really vary.

And it reminded me of times when I’ve seen this play out in the workplace.

Let’s say you are in your early 50s and you are looking to transition out of your position as owner in the next 5 - 10 years.  

If you want to hire your successor, I can 100% guarantee you that this person will be younger than you. You will have to know how to relate to them because they will be at a different life stage and have very different values than you do.

And if you're thinking "okay, but what does this actually have to do with the numbers side of my business," stay with me lol. This is exactly where succession plans can fall apart long before anyone signs that sale and purchase agreement,

Here are three things I'd want an early 50s professional services firm owner to know:

1. Your successor probably can't afford to buy the business the way you did.

The math has changed. Housing costs more. Student debt is very real.  

The version of "work your way up and then buy in" from the 80s and 90s just doesn't work the same way now. If your transition plan assumes your successor will walk in with cash or a big bank loan, you may be preparing for a buyer who doesn’t exist anymore.

The “fix” lives in the structure: vendor take-backs, earn-outs, gradual equity release, as well as stuff like capital gains reserve planning. All of that takes 3 - 5 years to design properly, which means your 5 - 10 year runway might be tighter than it sounds.

2. The value in your head is almost never the value the successor sees.

You see the business you built.  They see the business they'd have to run for the next 20 years.  Your number is built on cash flow and the decades of hard decisions you made to build it whereas their number is built on risk, reinvestment needed, and what they could earn elsewhere.  That gap has to close before any transaction works.

How? Clean financials, normalized owner compensation, and honest convos about unusual items / add-backs. The sooner you start preparing your financials with a future buyer in mind, the smaller that gap is when the time comes.

3. Their version of “success at work” is probably quite different than yours.

Younger successors often want profit-sharing sooner, flexibility built into the role, and (some) equity on day one, not after a decade. So, if your plan is modelled on how the business was handed to you, you may be designing for a candidate who no longer exists.  And this is where Age of Attraction actually sort of makes sense: different life stages, different values, different rules for what a good deal looks like.

None of this is about "relating" to someone younger. It's about the intentional choices that make a transition work for both sides financially and structurally.

And those choices have to start well before you're ready to leave.

If any of this is hitting close to home, I see you!  Hit reply. No pitch - I'm just genuinely curious to hear where you're at and also happy to point you toward the first two or three questions worth sitting with, whether we work together or not.