FAMILY BUSINESSES IN TRANSITION HAVE ONLY A 30 PERCENT PROBABILITY OF SUCCESSFUL TRANSFER TO THE SECOND GENERATION. WITH BETTER PLANNING AND COMMUNICATION, YOU CAN BOOST THOSE ODDS. BY DAVID FOIL AND ANDY STONE
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SUCCEEDING with SUCCESSION
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FOREST LANDOWNER • WWW.FORESTLANDOWNERS.COM
hen it comes to succession planning with family forest to wrap their arms around the nature of a timberland asset. landowners, the key is communication. That’s not Studies show that family businesses in transition have a 30 always easy with percent probability of complicated family dysuccessful transfer to the namics, busy schedules, second generation, a 10 people living far away, to 15 percent probability and a subject matter that of successful transfer some find confusing. to the third generation, That’s why David and less than a 5 percent Foil and Andy Stone of probability to the fourth Forest Resource Consulgeneration. A lot of that is tants in Macon, Geordue to poor planning and gia, have developed a communication. program where they meet with multiple generations Q: How do you start the of a forest landowner communication profamily to facilitate the cess? discussion and get the A: Start with an annual wheels of succession meeting at the very least, turning. Their goal is not and it’s best to be done at to produce a definitive the property. You might David Foil, President of Forest Resource Consultants succession plan, were break it into an education and an FLA board member, will co-lead a seminar on succession planning at the 2023 National Conference that even possible in a segment, a tour of the of Private Forest Landowners in Nashville. few sessions, but to get property, and another part family members thinking where you’re having fun. about long-term goals, core values, and strategic objectives We did one where the adults were in the education portion, for the land. That way, they can work toward a term sheet they and all the kids were out (supervised) on ATVs. We let them can take to lawyers, who will draft official documents to guide have fun and learn while they were there. That was an activity the family into the next generation and beyond. they won’t forget, going out there and getting muddy, laughFoil, FRC’s President and an FLA board member, and ing, and learning along the way. Stone, who serves as FRC’s Director of Family Business Services, will conduct a seminar on succession planning at the Q: Nobody likes to talk about death and money. How 2023 National Conference of Private Forest Landowners in should families broach these sensitive, uncomfortable Nashville in June. They spoke recently with Forest Landowner topics and get the conversation started before it’s too magazine editor Pete Williams about how families can tackle late? succession planning. A: You must get everyone in the room and have that conversation. When we work with families, we talk individually with Q: Succession planning for forest landowners seems each member first and ask the same questions to find out what like a daunting task. Where do you begin? they each want before we put them in the same room togethA: The one important thing, no matter where you are in the er. We also set ground rules for the discussion. It helps us as process and how much land you have, is to start early with facilitators manage expectations and give them some direction good communication. An education process for family memto the conversation. bers and future generations will be the key to continuity and improving the probability of success in passing both the land Q: What feedback do you get? and the legacy to the next generations. It boils down to this A: We’ve had situations where one sibling was the primary background work you do in advance. Some family members heir apparent to the decision-making process, and the other are interested, some are not, but there might be some not siblings had little or no knowledge of the business. In one interested because they don’t understand it. They might be case, one was vocal about how little the sibling had been told. more interested if they know more about the opportunities The sibling felt the father had picked the other sibling to run and benefits. It’s usually a lack of knowledge that makes it things. The chosen one thought enough was shared with the overwhelming, and that’s true no matter how much land is other siblings, while the other sibling thought enough wasn’t involved. Even at the 700 to 800-acre level, it’s hard for some shared. One sibling just liked getting a check. With multi-sibMARCH • APRIL 2023
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