Passing a family business to the next generation involves more than signing over shares. It touches leadership, ownership, taxes, family relationships, and the owner's own retirement. Because so many areas overlap, owners often bring in outside help, and one of the first questions is who that help should be.
Family business succession planning consultants are one part of that answer. Attorneys, CPAs, valuation professionals, and financial advisors each handle different pieces. This guide explains what a succession plan usually covers, what each professional typically does, and the questions owners can ask before hiring anyone.
What Family Business Succession Planning Covers
A succession plan generally addresses three related transitions. They can happen at the same time or years apart.
Leadership Succession
This is about who will run the company day to day. It may involve identifying a successor, defining roles for family members who work in the business, and setting a timeline for the current owner to step back.
Ownership Succession
This is about who will own the company. Ownership and management do not have to pass to the same people. A child who does not work in the business may still inherit an ownership stake, while a non-family executive may run operations.
Wealth and Estate Transfer
This is about how the value of the business moves from one generation to the next, and how that transfer interacts with gift taxes, estate taxes, and the rest of the family's assets.
Who Family Business Succession Planning Consultants Are
The term "succession consultant" covers a range of professionals. Some focus on family dynamics and governance. Others come from management consulting, accounting, or law. In practice, a succession plan usually involves several people working together.
Family business consultants: Often help with communication, family meetings, governance structures, and preparing the next generation for leadership.
Estate planning attorneys: Draft wills, trusts, buy-sell agreements, and transfer documents, and advise on legal requirements.
CPAs and tax advisors: Model the income, gift, and estate tax effects of different transfer approaches.
Valuation professionals: Estimate what the business is worth, which affects gift values, buyout prices, and estate tax exposure.
Financial advisors: Look at how the transition affects the owner's personal cash flow, retirement income, investments, and broader estate plan.
Investment bankers or business brokers: Become involved if part or all of the business may be sold to an outside buyer.
What a Succession Consultant May Help With
The scope of an engagement varies widely, so it helps to define it in writing. Common areas include:
Readiness assessment: Reviewing the business, the family, and potential successors to see where gaps exist.
Family meetings: Creating a structured setting where expectations can be discussed openly.
Governance: Helping families set up a family council, a board with outside members, or written policies on employment and ownership.
Leadership development: Building a plan for a successor to gain experience and authority over time.
Timeline: Mapping out when roles, responsibilities, and ownership will shift.
Communication: Planning how and when employees, customers, and lenders will be told about changes.
The Ownership Side: Structures Families Discuss
How ownership moves to the next generation has tax and control consequences. These are some of the approaches families commonly review with their attorneys and CPAs.
Gifting Ownership Over Time
Owners may transfer shares gradually during life. Annual exclusion and lifetime exemption limits apply, and gifts of minority interests may be valued with discounts, subject to appraisal and IRS review.
Selling to Family Members
A sale to children or to a trust for their benefit, sometimes paid in installments, can provide the owner with income while shifting future growth to the next generation.
Voting and Non-Voting Shares
Recapitalizing the company into voting and non-voting interests can allow an owner to transfer economic value while keeping decision-making authority for a period of time.
Trusts
Various trusts can hold business interests for heirs. Each type has its own rules about control, taxation, and how long it can last.
Buy-Sell Agreements
These agreements set out what happens to an owner's shares after death, disability, retirement, or departure. An agreement that reflects the current value of the business and has a funding plan tends to work more smoothly when it is needed.
Questions to Ask When Evaluating a Succession Consultant
Before engaging anyone, owners can ask questions such as:
Background: What kinds of businesses and families have you worked with, and in what industries?
Scope: Which parts of the plan will you handle, and which will you leave to attorneys, CPAs, or other advisors?
Process: How do you structure family meetings, and how do you handle disagreements?
Fees: How are you paid, and what is included?
Coordination: How will you share information with the rest of the planning team?
Credentials: What training or professional designations do you hold?
Clear answers can help an owner compare options and set expectations for the whole planning team.
Common Points of Friction
Succession plans can stall for reasons that have little to do with documents.
Timing: Owners and successors may have different views on when a transition should happen.
Fairness among heirs: Treating children who work in the business and those who do not in a way the family considers fair can take careful planning.
The founder's future role: Owners who step back may want a defined role, such as board chair or advisor.
Dependence on the business: If the owner's retirement income depends on the company, the transfer terms have to account for that.
Addressing these topics early, with the help of a neutral facilitator, can make later decisions easier.
The Owner's Personal Financial Picture
A succession plan is also a retirement plan for the owner. Owners may want to understand how much income they will need after stepping back, whether that income will come from the business, and how much of their net worth will remain tied to one company. Building assets outside the business over time can add flexibility, whatever path the transition takes.
Timing matters as well. Some decisions become harder or more costly when they are postponed, a topic explored in our article on the cost of waiting.
How Auric Works Alongside Succession Advisors
Auric Capital Partners is not a succession consulting firm. Its role is on the personal wealth side of a transition. The firm's exit strategies service focuses on helping business owners prepare for and navigate transitions, including the timing, cash flow, and legacy questions that come with them. Its multigenerational planning work helps families think across generations, and its estate planning service is built around working with the family's legal professionals.
For founders and families who have built something meaningful, that can mean coordinating with the attorney, CPA, and succession consultant so the owner's investments, income plan, and estate documents point in the same direction. As the firm puts it, "We work as a team so you don't have to manage one." You can review the full list of services on our website.
Get Started
If you are beginning to think about who will lead and own your family business next, a conversation can help you organize the questions. Contact our team to set up a time to meet in Aliso Viejo or virtually.
Frequently Asked Questions
What does a family business succession planning consultant do?
A succession consultant typically helps families plan leadership and ownership transitions. Work may include family meetings, governance structures, successor development, and timelines, often in coordination with attorneys, CPAs, and financial advisors.
When should a family business start succession planning?
Some families start years before an expected transition. An earlier start can allow more time for successor development, gradual ownership transfers, and family conversations.
Is a succession consultant the same as an estate planning attorney?
No. An estate planning attorney drafts legal documents and gives legal advice. A succession consultant usually focuses on the business and family process. The two roles often work together.
How is a family business valued for succession planning?
A closely held business is usually valued through an independent appraisal. The valuation can affect gift and estate taxes, buyout prices, and how fairly heirs are treated.
How can owners treat heirs fairly if only one child works in the business?
Families use different approaches, such as balancing inheritances with other assets, using life insurance, or creating voting and non-voting shares. Open family discussion and legal advice can help.
This content is for educational and informational purposes only and should not be considered investment, tax, or legal advice. It is not a recommendation to buy or sell any security or to adopt any particular investment strategy. Investing involves risk, including the possible loss of principal. Past performance is no guarantee of future results, and no strategy can guarantee a profit or protect against loss. Please consult with a qualified professional about your individual situation. Registered Representative of Sanctuary Securities Inc. and Investment Advisor Representative of Sanctuary Advisors, LLC. Securities offered through Sanctuary Securities, Inc., Member FINRA, SIPC. Advisory services offered through Sanctuary Advisors, LLC., a SEC Registered Investment Adviser. Auric Capital Partners is a DBA of Sanctuary Securities, Inc. and Sanctuary Advisors, LLC.
