While U.S. Securities and Exchange Commission Bulletin 14E only applies to publicly traded companies, privately held firms would benefit from a thorough succession planning process, too.
“A lot of public companies have advisory boards that can help them with succession planning. All companies need a succession plan, but less than 10 percent of privately held companies actually have one in place,” says Robert Shenton, a certified public accountant and managing partner of the Columbus office of Plante & Moran.
Succession planning is usually seen as an internal process, but privately held companies, particularly family-owned businesses, should look at the external impact. “Planned or unplanned, business can fall off at the time of transition. If it’s not handled right, it can quickly affect customers and clients. They don’t know what the next step is, and that can lead to indecision on whether to continue the business relationship,” Shenton says.
Succession planning is also occurring at nonprofit organizations. “Many times the board members at nonprofits are from public companies. They’ve been through the process and bring it to the table, so we see a lot of replication,” says attorney John Beavers, a partner at Bricker & Eckler.
printed from the December 2012 issue of Columbus C.E.O. Copyright © Columbus C.E.O.