Why You Should Start Making Succession Plans Early

RCS Influencer Trent Cotney says that family businesses should make their succession plans ahead of time in case a crisis occurs.

Editor's note: The following is a transcript of a conversation between Megan Ellsworth, our multimedia manager, and Trent Cotney, partner of Adams and Reese. You can listen to the interview or read the transcript below.

Megan Ellsworth: Hello, everyone. My name is Megan Ellsworth here at RoofersCoffeeShop.com, and I am back again for an influencer response with Trent Cotney. Hi, Trent.

Trent Cotney: Hey, how's it going?

Megan Ellsworth: Going good. I'm excited to hear what you have to say. This month, this month's topic is family business. And the question is, how are companies building succession plans for generational change and staying friends?

Trent Cotney: Yeah, very difficult, right? And roofing, a lot of generational businesses, a lot of businesses that have been around forever. And anytime you've got family involved, there's usually more emotion than you would have if it was just a business partner. So, part of what I really recommend is if you are an owner that is looking to transition to the next generation, that you start on it now: don't wait until a crisis moment occurs where I've seen a lot of times where the key owner becomes disabled, or is unable to function anymore, and then you're stuck wishing you had done a bunch of things.

So, what I would suggest is start having those conversations now, determine what a good purchase price is, what does the transition look like? How long will current ownership remain? Will they have a consulting position? How does all that work? But take the time now to really think about it. Don't wait until it's too late.

Megan Ellsworth: Well said. And any last words or words of advice for family businesses, just in general too?

Trent Cotney: Yeah, there's a big tendency with family businesses and businesses in general, especially in roofing, to be a little sloppy on the paperwork. I can't tell you how many times I've had people come to me saying, "Well, we've already got our deal ironed out. We just need you to put it on paper." It's not that easy, right? There's a lot of moving parts, a lot of tax issues, a lot of transition issues, liability, asset purchases, all those types of things. So, what I would recommend is really work towards cleaning up your house, literally and figuratively make sure that you've got the right paperwork in place before you end up in that transition.

Megan Ellsworth: Well said. I think that's some great advice, and I hope everyone out there with family businesses took notes. And thank you so much. We'll be chatting with you next month.

Trent Cotney: Sounds good. Thank you.