The number one issue construction contracting companies will face over the next 10 to 20 years is succession planning, according to accounting firm BKD, LLP. As the amount of wealth in the nation transfers generations, that also includes wealth tied to family-owned firms.
The orderly transfer of control and assets is critical to the future success of these owner-managed or family-run enterprises. A lack of planning and clear succession causes many problems for companies and can be incredibly stressful for family members, owners and employees.
Certified public accountants have a deep involvement in companies' financial operations and owners’ personal finances, making them best positioned to help contractors set up orderly succession plans, said Tim Wilson, CPA, CCIFP, National Industry Partner at NASBP Associate BKD, LLP.
The most successful plans can take as long as 10 years to implement as owners identify the type of leadership they want to put in place, said Wilson, who serves on the NASBP CPA Advisory Council.
“When you see both sides of the ledger, you can help the owner plan for what that transition looks like and how to achieve the best result for the company and the owner,” he said.
Succession planning often must take into account not only the business' needs, but also any plans an owner has for taking care of family members or charitable contributions. Sometimes when a family transitions ownership or management to another generation, the new leaders will have different ideas or strategies that may not align with company goals, creating conflict.
Many contractors also worry about the business relationships they’ve cultivated over the years, Wilson said. They typically want to make sure the new owners or managers will continue to build on those important relationships to ensure the company’s future success. That’s where CPAs can play an important role in helping firms take the first step in the planning process by evaluating goals and strategies and determining what role family members will have going forward.
“Bringing some very orderly steps to the process is one of the CPA’s primary roles, as well as really helping guide that process,” Wilson said.
CPAs can also help owners understand succession planning from both the ownership and management side, because some transition to having non-family members run the company, but still want to retain some stake in the company.
Talking with your CPA about your plans is a good first step for ensuring an orderly succession when you’re ready to step away from your business.