CFO's Are Critical To Succession Planning
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CFO's Are Critical To Succession Planning

CFO's Are Critical To Succession Planning

Clients are often concerned about their CFO's role in succession planning.  In a simple sense, the question is easy to answer related to the foundation of business practices.  However, in the work we do, we are talking to clients about their business, their family, and the future they envision.

CFO's have a vested interest in succession and the continuity of business success – after all it impacts their own success. They understand the future goals and vision of the current owners and understand that others in the multi-unit franchisee organization also have a vested interest in the continued success of the business through the next generation of leadership. CFOs are in a unique position to affirm and advocate for these varying levels of vested interest.  Influential CFOs are the business conduit between short-term financial goals and long-term vision and business strategy.

Encouraging clients to include their CFO in planning discussions can get a little dicey.  Business owners sometimes do not want to peel back the onion, as I say, to share too much about their finances separate from business financials.  The reality is the CFO functions in a multitude of areas critical to succession and by leveraging your CFO they can facilitate positive outcomes to potential succession challenges such as:

  • Profitability: Understands critical drivers. A CFO generally has a good handle on sustainable profitability and how resilient it could be to unforeseen events and circumstances.
  • Working Capital:  Knows how a circumstantial change in profitability can impact working capital and if the business has enough to survive the unexpected (need I mention Covid?).
  • Credit Continuity and Worthiness: Knows how succession impacts credit continuity, creditworthiness, and navigating succession challenges.
  • Estate Tax Vulnerability: Ability to engage with other advisors to untie the knots and understand where the business and family are vulnerable to estate tax liabilities.
  • Strategic Vendors and Customers: Aware of blindsides in these areas, especially related to vendors' contractual obligations or loyalty issues.
  • Key Manager and Family Member Successor Vulnerabilities: Exposure to operations provides insight into classic succession challenges of how dependent the business is on the pretenders and how to develop and the contenders.

Alignment with the CFO is probably one of the biggest challenges business owners face. What I often see is a misalignment on technical issues. Still, I also see contradicting perspectives or the sense of awkwardness in bringing the CFO into specific conversations out of a lack of trust.

However, effective CFOs understand the need for succession planning and its role in sustaining the business (and potentially their role) and will encourage more open discord with the owner. Likewise, business owners who work on trusting their CFO can partner with them to ultimately help achieve the desired goals for the business now and in the future.

Dan Iosue is a Partner of The Rawls Group, a business succession planning firm.  Dan specializes in dealing with the issues that must be resolved by business owners to implement succession strategies geared towards building business value.    For additional information, visit or call 407-578-4455

Published: May 18th, 2021

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