Planning for the future: The Success of Succession
December 21, 2016
Succession planning is the process for identifying and developing the new for when the old moves on. In the sports sector, particularly the management of sports teams, succession planning is a vital component to ensuring long-term success. Indeed, succession planning has been behind the creation of various sports dynasties over the years, with clubs who have planned ahead by investing in their youth programmes and successive managers, ensuring a more stable transition through the decades.
Take, for example, Liverpool F.C.’s famous “Boot Room”; an informal coaches room where coaching staff would sit, drink and discuss the team and tactics instigated by Bill Shankly in the 1960s (carried on by Bob Paisley in the 1970s and Kenny Dalglish in the 1980s). Such was the seamless transition between these managerial giants that Dalglish was still plying his trade as a player when the mantle of manager was bequeathed to him.
Many believe this “Boot Room” ensured the continuity of core philosophies and values between successive generations, and helped to achieve an arguably ‘unbroken’ line of succession at Liverpool. This underpinned the unrivalled level of success and dominance enjoyed by Liverpool during the 1980s.
By contrast, Manchester United’s most successful periods in its history have occurred under the stewardship of singular leaders (Sir Matt Busby and Sir Alex Ferguson). Their success is easily identified given the significant dip in fortunes the club suffered after each man’s departure. Many ascribe this resulting lack of success to an absence of forward planning.
This criticism is particularly directed at Ferguson. Following several abortive attempts to retire in 2000s, the Club’s reins passed to David Moyes (perceived by many fans as an outsider without an appreciation for the traditions of the club) on 9 May 2013 under a six-year contract (which lasted until 22 April 2014). The Club are now on their third manager (who needs no introduction) since Ferguson’s departure, and high profile managers (namely Louis van Gaal) have been, as yet, unable to replicate the Club’s previous successes under Ferguson. This resultant decline is linked by many to the club’s lack of succession planning both in relation to the manager, and the playing squad which was allowed to age towards the end of Ferguson’s reign, without investment in developing younger talent. Failure to look ahead can also be costly. Since Ferguson’s departure, the club has shelled out hefty transfer fees (notably in acquiring Paul Pogba, Memphis Depay and Anthony Martial, amongst others) and made significant payments both to players and agents in panicked transfer sprees to recover some of their former glory. This absence of internal talent at Manchester United is shown in their spending figures for summer 2016: £149.55m on purchases; £8.50m on sales (a net spend of -£141.05m; a negative net spend beaten only by city neighbours Manchester City). This has shown, however, that it is not a ‘quick fix’, and the solutions are to be found in planning well in advance.
As fanciful as it seems, parallels with running of England’s two most famous football clubs can often be found in the world of business, in particular the small and medium enterprise sector. Today, as younger generations seek opportunities elsewhere traditional family run businesses are facing similar succession planning problems.
Such issues not only cause concern for business owners, but also to individuals’ personal wealth and assets. How best to protect these (so that future generations are provided for) is a crucial question that should be answered well in advance.
Here at Kerman & Co, the Private Wealth team includes experts from our commercial and private client departments to focus on providing bespoke legal advice to keep our clients well informed on all stages of their life and business planning, whether it’s starting up, taking over the reins from a different generation, or retirement planning.
It’s often the case that personal planning issues, such as Wills and Lasting Powers of Attorney and property purchases, will be important in business planning as well.
And in turn, when planning for your personal future you often need to look at your business planning, for example do you have shareholders’ agreement in place that works with your Will? Perhaps a trust to maximise your business property relief for inheritance tax might be more efficient?
As part of this process we will look at the wider family position. Is your wealth going to be protected if your children get married or purchase a property and co-habit? If your children or other family members are involved in the family business, have you thought about formalising the governance so you are all agreed on a strategy that is best for both the business and the family?
At Kerman & Co. our Private Wealth team can review all aspects of your personal circumstances as well as looking at your business interests. We will address all key issues and ensure that you receive tailor made advice that will help you look at succession planning from a holistic perspective.
The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.