Setting Up a Business Succession Plan
Besides apple pie, there are not too many things more American than Mc Donald's and Coca-Cola. They both started from humble beginnings and utilized their vision to expand into global powerhouses. Their brands are some of the strongest and most widely recognized in the industry. They have been aligned as partners for quite some time, but this is where the similarities end. Recently, both companies appeared in the headlines regarding their CEOs and how they deal with change.
While attending a Mc Donald's Worldwide Owner/Operator Convention last week Jim Cantalupo, Chairman and CEO of Mc Donald's, passed away suddenly from an apparent heart attack. He was only 60 years old. Only a few hours elapsed when their board of directors announced that Mr. Cantalupo would be replaced by Charlie Bell their 43 year old President and Chief Operating Officer. See the article from Mc Donald's corporate website: www.mcdonalds.com/corp/news/corppr/cpr_04192004b.html
Two days later, Coca-Cola informed shareholders during their annual meeting that they have not found a suitable replacement for Chairman and CEO Douglas Daft after interviewing dozens of candidate CEOs. Daft first announced his retirement over two months ago with plans to retire by the end of this year. See the article in CNN/Money online: money.cnn.com/2004/04/21/news/fortune500/coke/index.htm
What lessons can be learned from these two examples? The simplest way to explain this is: Mc Donald's had a plan, Coke did not. These are some of the biggest companies not only in the U.S. but in the world. Whether you are a sole-proprietor or a large corporation, you can let this serve as a wake-up call. You need to have a succession plan in place!
There are many options for a succession plan such as death of an owner or a "changing of the guard" due to retirement as mentioned above. It can also involve handing the business over to family members such as what happened at Wal-Mart. A study from two years ago showed that 34% of businesses in the S&P 500 are family owned businesses. 1 You can sell your company to an outside buyer. Also, you could sell the business to your key members of management, or your company can become employee owned like renowned Bay Area icon Zachary's Pizza in Oakland .
InConcert Financial Group can help you review all of these options and help you build a succession plan that suits your needs. Please do not hesitate to contact either Tom Biesheuvel, or Rich Scarpa at (510) 235-1044.
1 Anderson, Sattar, Mansi and Reeb (2002)
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