Don’t Blow It At The Finish Line (Part 2)

In last week’s blog I opened the sale and succession can of worms (you can access it here) and said I’ve got 5 ideas for you that can transform the quality of your future exit.

Idea 1 was that regardless of whether you are staying and chasing growth, or exiting and looking at sale or succession – the issues are identical.

Idea 2 was that you must develop future leaders with the selling skills and leadership skills to carry on the mission.

Let’s look at the other three ideas now. And remember, this blog is for any business owners who are trying to avoid undesirable outcomes post sale, because they care deeply about their clients and their team.

Idea 3: Who owns the soul of your business?

I heard a quote recently from Verne Harnish, author of Scaling Up:

“If your company is successful it has a soul.”

Verne went on to say, “What was the soul of Apple when Steve Jobs was there?”

In his view, design. Jobs was maniacal about design. Not innovation as many of us think. Apple didn’t invent the mouse.

When Jobs hired Jony Ive, he had someone who cared as much or more about design as he did. Apparently, Jobs and Ive had lunch together every single day.

So when Steve Jobs died, the soul of Apple lived on.

However, when Jony Ive left Apple in 2021 Verne posed the question, will Apple continue to be great? Is there anyone there who carries on the soul of the business? If product lead times are say 3 years, maybe it’s only now that we’re starting to find out.

Verne then told a story about the owner of a construction company that had grown to $600M in revenue. The owner was trying to step back and allow his next generation to lead, but he wasn’t happy with how things were being done.

Verne asked the owner what the soul of his business was and he knew instantly; he said “We do very complex construction projects and we never miss a deadline. But in the last 48 months we’ve missed four deadlines.”

Verne said, “You have permission to remain maniacal about not missing deadlines AND “your job as CEO is to find a leader (a successor) who cares as much or more about not missing deadlines as you do.”

This applies to financial planners too

The construction owner story above is a great analogy for the owners of financial planning firms who are choosing their successors.

Letting go is hard for any business owner, and if you don’t see anyone in G2 caring as much as you do about whatever is the soul of your business then that task becomes nigh on impossible.

If you are trying to step back and things feel “off” for you, this is probably the root cause.

That’s why I recommend having multiple potential successors coming through the ranks. You can’t bet your company’s future on just one person (unless they’re brilliant). With multiple G2 successors coming through, you can identify the person who can carry on the soul of your business when you’re gone. That’s your person.

Idea 4: There are two transitions

Creating a plan for succession OR sale requires two transitions:

1. The ownership transition
2. The leadership transition

And they’re different.

Most of the sessions you’ve ever attended on succession planning or the sale of your business focused on number 1, but no one is addressing number 2.

The ownership transition is about the transfer of ownership and by necessity, focuses heavily on the financials. Most owners I know are hung up on the issue of “How will my G2 successors ever afford to buy my business if it’s worth £2M, £5M or £10M?

And while it’s a fair question, the financial side of things is the easy bit. If it only comes down to the money, trust me, there’s always a solution.

The leadership transition on the other hand is tricky and requires a committed and longer-term plan of action. This should be pretty obvious, but business owners don’t think about this early enough.

At a conference I attended in the US, I was able to have a quick sit-down with Tim Kochis from Kochis Global, and one of the original founders of Aspiriant (one of the leading financial planning firms in the US).

He flagged the issue that often comes up in succession discussions – “I can’t afford to buy 51% so I won’t buy.” In Tim’s view, this is a big mistake.

His advice?

You’ve got to separate the management transition from the ownership (financial) transition:

• Deal with new corporate governance separately
• Deal with the financial transition separately

In his view, they are not connected, and if you do connect them, you’ll never resolve the issues.

It’s fine to sell down chunks of the business a bit at a time. Forget the idea of having to own 51% from the get-go if it is unaffordable.

One large US firm I know used to have a few major shareholders, but now there is only 1 person who owns a 15% chunk, and 80 new shareholders own the rest. That’s been achieved over a medium to long-term horizon, but the business is in great shape for the future as a result.

And here’s a great example of that approach in action here in the UK.

Idea 5: It’s not about them – it’s about you

The thing I’ve learned about leadership and all forms of personal development is that while we want others to grow and develop, it usually comes back to ourselves. Let me explain.

I listened to a panel session years ago at a conference. A new CEO was talking about the challenges they faced when they first took on the role in an existing and mature financial planning business. A consultant they were working with advised them to “get themselves organised and in flow”. By doing that, the business would then get “in flow” too.

Notice that the advice wasn’t focused on anyone but the leader.

Another firm I know has a brilliant emerging leadership team that has been assembled over a long period of time. To their credit, the business owner is investing in some formal leadership training for the up-and-comers. Big tick.

However, the owner doesn’t attend the leadership training with their leadership team. Big mistake in my view.

It’s a bit like identifying my marriage needs some work and telling my partner they should go to marriage counselling (by themselves). That’s not going to work. For any chance of saving the relationship, both of us would need to be there.

I recall a story I read about Gareth Southgate, the former England football manager. As football fans know, Gareth famously missed a penalty as an England player in a penalty shootout at the Euro ‘96 tournament. That’s gotta hurt.

When, as England manager, Southgate brought in applied psychologist Dr Pippa Grange to work with the players, she insisted that he first address the trauma of his own penalty miss all those years ago.

Once again, notice that the advice wasn’t focused on anyone but the leader.

My PFS Power webinar called Don’t Blow It At The Finish Line explores all five of the ideas in my last two blogs in more depth. You can catch the replay here.

A fish stinks from the head

If you’re the leader in your business then it’s you that needs to work on you.

As the saying goes, “A fish stinks from the head” and so do organisations.

Working on yourself will make the biggest difference in creating and developing the best possible next-generation of leaders in your organisation.

Are you up for that challenge?

Final thoughts

I picked up some great sound bites from Philip Palaveev of The Ensemble Practice at a conference I attended in the US. Here are some snippets:

Philip described a roundtable session he attended on succession, which saw a founder get up and speak eloquently about how the business was their masterpiece, their work of art, that they wanted to see preserved.

People applauded and saw the beauty in their speech.

But then a successor stood up and said ‘No’. Our job is not to curate the founders’ art and preserve it like it’s a museum piece. We want to keep painting and add to it.

And that’s succession in a nutshell.

Are we preserving the founders’ Art? Or are the successors still wanting to paint and add to the picture?

Clearly, it’s got to be the latter.

Some questions to consider:

• Who will be the steward of your client relationships (after the founder/s depart)?
• Who will be the client’s new adviser?
• What happens to your team?
• Who will wave the flag? Who will grow your firm and create opportunities?
• Who will invest the capital the business needs?

Philip said, we haven’t been great at growing businesses. We need to teach our second generation (G2) successors how to grow businesses. Growth is essential for succession.

Philip’s advice to G2

Philip had some great advice for potential G2 owners:

“A business is much more like a sports team (or a theatre company) – the control and leadership are distributed. There is a coach and a director, but if you are the best player, if you are the best teammate, if you are the best scorer or the best singer, you will play in every game and have a part in every play.”

Ownership is complicated:

• Michelangelo did not own the Sistine Chapel
• Michael Jordan did not own any shares in the Chicago Bulls
• Frank Lloyd Wright owned only two houses
• Irving Berlin sold the rights to White Christmas
• Banksy does not own his own murals
• Van Gogh owned a lot of his paintings, but died in poverty

Conclusion

If you care about your clients, your team, and the legacy of what you’ve built, then your exit isn’t a transaction, it’s a transition.

And transitions don’t happen at the point of sale. They’re built years in advance.

The firms that “sell well” or execute a successful succession aren’t lucky. They’ve done the hard work early. They’ve developed G2 leaders. They’ve protected the soul of the business. They’ve separated ownership from leadership. And crucially, the founder has done the work on themselves.

Get this right, and your business doesn’t just survive you — it continues to serve people and make a positive contribution to the world long after you’re gone.

Get it wrong, and no deal structure in the world will fix what follows.

So the question isn’t when you exit.

It’s whether you’re building a business that deserves to outlast you.

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P.S. I can definitely help you with this stuff. If you want to dig in and do the work, let’s talk.

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