The next chapter: Preparing your business for family or management succession

Jayne McQuillan

Guest Columnist

April 20, 2026

“I’m ready to retire, but my successors aren’t ready to take over.”

A business owner said this to me during our first meeting.

He’d built a successful company over three decades and believed the path forward was clear: his management team would take over the business.

When asked when he planned to retire, he replied confidently, “In about three years.”

I then asked him three simple questions.

• Had he talked to his management team about buying the business?
• Were they capable of running the company without him?
• And could they afford to buy him out?

The answer to each question was the same – “No.”

That moment marked the beginning of an eight-year transition, one that unfolded very differently than the owner originally expected.

Stories like this are more common than many owners realize. 

Many successful businesses were built by founders or long-tenured owners who spent decades growing their companies, developing relationships and establishing a reputation in the community.

Yet when it comes to planning the next chapter of leadership, organizations often find themselves unprepared.

Succession planning is often delayed because day-to-day operations take priority or the owner is not yet ready to think about stepping away.

But waiting too long creates significant risks for the owner, employees, customers and the long-term health of the company.

A well-designed succession plan ultimately protects three things: the business itself, the people who depend on it and the legacy the owner has worked hard to build.

Succession is more than choosing a successor

Many owners believe succession planning simply means identifying who will take over the business.

However, in reality, a successful transition requires alignment across three areas:

• Ownership transition addresses who will ultimately hold equity in the company and how that transfer will occur.
• Leadership transition determines who will guide the organization’s strategy and day-to-day operations.
• Financial transition ensures that the exiting owner can convert business value into personal financial security.

When these elements are not aligned, even well-intentioned succession plans can create instability for the business and limit the owner’s options.

The realities of family and management successions

For many privately held companies, the preferred transition is to family members or a trusted management team.

Though these paths can preserve culture and relationships, they also bring unique challenges.

Family succession can be deeply meaningful.

Owners often take pride in seeing the next generation continue what they built.

At the same time, family transitions can raise difficult questions about fairness, expectations and readiness for leadership, especially when the business has grown significantly since the previous generation took over.  

Not every child wants to run the business, and not every interested successor is prepared to lead it.

Successful family transitions often require honest conversations about interest, capability and long-term responsibility.

Management succession offers continuity and stability.

Long-tenured employees often understand the company’s operations, customers and culture. 

However, leadership teams may need time to build the financial capacity to purchase ownership, and they often need additional development before assuming full responsibility for the organization.

Beyond financial and structural considerations, succession planning also involves a significant personal transition for the owner.

The business represents far more than an asset.

It reflects decades of work, identity, family security and community reputation.

Stepping away can raise difficult questions about purpose, trust and legacy.

Addressing these challenges openly helps owners transition with greater confidence in what comes next.

Building readiness and structuring the transition

Successful leadership transitions rarely happen quickly.

Future leaders must gradually assume greater responsibility, participate in strategic decision-making and develop the confidence to lead.

Mentorship and structured development often play an essential role.

In many cases, a succession plan unfolds over three to seven years, allowing the next leader to grow into the role, while the owner remains available to guide the transition and reduce risk along the way.

Owners considering family or management succession have several structural options.

Some transitions occur gradually through minority ownership purchases or phased buy-ins. 

Others involve management buyouts, where leaders acquire ownership over time using a combination of company cash flow, bank financing and seller financing.

In some cases, families retain ownership, while professional managers assume leadership roles.

Hybrid approaches combining family and non-family ownership can also be effective.

The right structure depends on the financial realities of the business, the readiness of the successor(s) and the long-term vision for the company – including how the owner wants to balance control, income and exit timing.

The cost of not planning

Businesses without a succession plan often face unnecessary disruption.

Leadership uncertainty can create anxiety for employees, customers and lenders – potentially forcing owners into unfavorable decisions.

In contrast, early planning often strengthens the organization.

Leadership development becomes more intentional, management teams grow stronger and the company is better positioned for long-term success.

How the right preparation changed the outcome

In the story I shared earlier, the owner ultimately financed the buyout himself.

What he expected to take three years took eight, but because he had built wealth outside of the business and prepared intentionally, the transition was successful.

Succession planning does not begin with legal documents or financial models.

It begins with thoughtful conversations about the future.

The most successful transitions start years before the owner intends to step away.

With time and intentional leadership development, succession becomes not an ending, but the beginning of the next chapter for both the company and the owner.

If you’re starting to think about your next chapter, now is the time to begin the conversation.

The earlier you plan, the more options you create for yourself, your business and the people who depend on it.