Saturday, June 15, 2024


Who, What, How and When of Succession Planning

by Marty Kirshner, CPA, MSA & Joe Ciccarello, CPA, MST; Gray, Gray & Gray, LLP


“Keeping it in the family” and keeping the family together

The energy industry was built on the strong backs of family businesses. Many of today’s most successful propane and heating oil companies can trace their roots back several generations. And, although consolidation and attrition has whittled away many family-owned energy marketers, there remains a core of private companies intent on seeing the next generation take over the business.

But the path of business succession has grown increasingly rockier with the passage of time. The once simple transfer of ownership and control has become a tangled web of legal and financial complexities. For owners of energy companies who wish to “keep it in the family,” the time to begin the process is right now. By following a logical process and being sensitive to the needs of each of the individuals involved, succession planning can become an opportunity, not only for a business to continue and flourish, but for a family to grow closer together.

Before the succession process starts, the question to ask yourself is this: Are you ready to begin thinking about life after work? If not now, when will you be ready? Even a young, active propane or heating oil dealer should begin the early stages of planning for the time when he or she is ready to move on.

There are four major steps to follow in planning for the next generation to assume the mantle of leadership at your company: who, what, how and when. The process is part practical, part emotional. But above all, proper planning at an early stage is far better than being forced to make quick and sometimes rash decisions at a time of crisis, such as the illness or death of an owner.



The business owner, that’s who. Everything starts with a deliberate decision by the owner to develop a succession plan that will benefit the business while securing their own financial future. The earlier this decision is made the better.

While the owner is the individual who knows the business inside and out, understands how the management team functions, and observes the strengths (and weaknesses) of the children who are in line to succeed in the top position, it will require a team of trusted advisors (consultant, accountant, lawyer) to develop the written plan that incorporates the details surrounding the transition of the business upon their retirement, illness or death, or if they become incapable of making decisions.

There are numerous options in how a succession plan is structured: transitioning to the next generation, bringing in someone to run the business until one of the children is ready to take over, strengthening the management team so the business owner can sell to them or the company’s employees (in an ESOP), or selling the company outright. Each option will have its own who, what, when and how. In this article we focus on an internal succession plan with multiple children in the business all assuming different roles.

The details and the outcome will be different for every business. But whether they are involved directly in the succession planning or not, you should communicate with all members of the family. There is no quicker way to the courtroom than to try and make major changes behind someone’s back.


Next comes the “what” phase. What does each family member want from the process laid out in front of them? To honestly assess and determine this, family members involved in the succession must meet frequently. Begin by meeting separately with the company advisor – parents first, then the children. Each party should express their concerns, wishes and worries. Then comes a joint meeting to uncover points of difference and agreement. Then, separate meetings again to evaluate and revise. Then again to work out differences.

If this seems like a “back and forth” process, it is. There is simply too much involved and at stake to trust to a single meeting. Taking the time to bring out deeply rooted feelings and concerns at this stage will pave the way for a smoother transition later.

We take pains during this evaluation phase to be sensitive to everyone’s feelings. A great deal of introspection is required, as well as total honesty with yourself and with others. Most of our clients who go through this process with us have their eyes opened by the depth of emotions and feelings that emerge. For the most part, it is a remarkably healthy and positive experience.

As the business owner, the parent must be the one, after having assessed each child’s strengths and weaknesses, to decide who will be the president, running the company, and what roles the other children will have. This is the hardest decision for the owner, choosing among his children. But it is also the most important one. If the parent makes the decision, the children will accept their roles, even if reluctantly. If a sibling makes the call, it will never be accepted.

What other considerations must be addressed in the planning process? A comfortable future for the parents is a primary concern. But so is the future of the business. Both must be assured of adequate cash flow: the parents to assure an expected standard of living, the business to survive and grow without a crushing financial burden. This is the point where too many families start to argue about details, without looking at the big picture. Both sides worry about the “how,” before agreeing on the “what.” Then again, we have found that parents and children are sometimes very closely aligned on what they expect and desire.

What child could deny his or her parent a secure, comfortable life in retirement? Mom and Dad will probably be earning a pretty good living by retirement time and deserve to maintain their lifestyle. While the retiring owner will be handing over management of the business to the next generation, will there still be a place in the company for his or her counsel and experience? At what level? Parents also want to make sure that all children are taken care of and are happy with the outcome.

On the other side of the equation, what parent would impose a heavy debt load on a business they helped to create and build? A child assuming the mantle of leading the family business has a right to have a high level of control, free from second-guessing or meddling. They also expect to live comfortably, and to be able to continue to grow the business. There are ways to structure a buyout that will serve both parties equally well.


Once agreement is reached on a level of income for the parents and a workable financial obligation for the company, it is time to address how all this will be accomplished.

The income source for the parents can be structured in many ways, and from many sources. A straight buyout, a buyout over time, rental income, Social Security, continuing salary, company-paid health insurance, investment earnings, retirement plans, deferred compensation - all are viable options for providing the cash flow to meet the needs of the parents.

For the company and the younger generation, there are an equal assortment of options for financing the succession. Structured properly, a buyout offers tax benefits in the form of deductions for many of the associated costs. Financing can even be worked out with the retiring parent. Don’t forget, upon a parent’s retirement, the company will also be saving what may be a substantial officer’s salary.


The final and most difficult step in the succession planning process is “when.” In many instances, a workable plan is prepared, but implementation is delayed again and again by a reluctant parent. The only thing worse than letting go too early is hanging on too long. Your succession plan should include a provision for precisely when the transfer will take place. Then stick to it. You’ll find it is a moment of great relief and release for both generations.

Once the plan has been put into action, we recommend the business owner take an extended vacation – preferably during the busiest time of the year. By stepping away from the business, they can see how each child is performing in his or her role, while still having time to make changes, if necessary.

The process of having an energy business successfully transferred from one generation to the next can be difficult, contentious and frustrating. But it can also be a remarkably enriching experience that bonds family members in new ways. The secret is thorough and comprehensive planning so that you can confidently move forward with the succession event.

Marty Kirshner and Joe Ciccarello are Partners in the Energy Practice Group at Gray, Gray & Gray, LLP, a business consulting and accounting firm that serves the energy industry. They can be reached at (781) 407-0300 or powerofmore@gggllp.com.

Business Management
July 2023
succession planning

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