Today we hear from Louis Mosca, executive VP and CEO of American Management Services, Inc., where he’s worked since 1998.
Versed in all aspects of the financial advisory business, Mr. Mosca has a particular specialization in the delicate matter of succession planning.
While succession planning is often discussed, many executives remain confused about how to proceed, says Mosca. These leaders are essentially running blind towards retirement. Time and again, crucial questions arise from his clients, which he presents in the linked article for the edification of all. Let’s examine them.
Some owners think employee stock ownership plans, ESOPs, are a good way to pass the hurdles of succession. Mosca doesn’t like them. As a rule, employees will need to borrow to buy the company’s equity. That goes right on the firm’s books as soon as they take the reins. His second objection is equally unequivocal: an ESOP means assembling a board and trustees, “and I don’t believe in management by committee.” Too many chefs with too many spoons muddy the broth, thinks Mosca.
Others wonder if it’s wise to include key management personnel in the planning and execution of the succession. Seems like a no-brainer and in Mosca’s view it is – although not in the way one might think. Only invite the participation of managers who have “the talent and the money to pay you off,” he warns – there’s no room for sentiment or blind loyalty in succession planning.
Some owners wonder if you can launch succession planning too soon. After all, they sometimes say, they’re still young and vital and the company is thriving. Why worry before retirement is pressing? Sure, says the ever-droll Mr. Mosca: don’t worry a bit. Your company’s business and your health and wellbeing are fully predictable. Take all the chances you wish…
For more information, please read:
What Business Owners Still Need To Know About Succession Planning | Forbes