Action! Why Family Businesses Can’t Wait for Succession Planning

The integration of both generations in this planning should facilitate the mentoring of the new leadership by current leadership while emphasizing the value to be derived from these new leaders. Mutual trust and family relationships can grow as retiring family members become confident in the abilities of the younger generation, while this younger generation can be motivated by the trust given by the older generation.

Successful Ownership Succession

Colleen R. Stumpf is a partner at MacDonald Illig Attorneys. As general counsel, she provides competent guidance to businesses as they address the various matters facing their business daily.

Popular television shows, such as “Succession,” derive much of their drama from the turmoil that results from the failure of a family owned business to implement a definite succession plan. While these shows overdramatize, art imitates life as many family owned businesses do not have viable succession plans.

Robust Succession Planning

According to PWC’s 2021 Family Business Survey, only 34 percent of surveyed companies had a “robust, documented and communicated succession plan.” Family owned businesses that have not embarked on the succession planning process are susceptible to substantial risks — fractured family relationships, company instability, and the erosion of trust in the company — fodder for successful TV and unsuccessful family owned businesses.

To avoid such notoriety, family owned businesses should begin developing a succession plan as early as possible before a crisis forces its creation. When designing an effective plan, families should focus on two areas of succession — operational succession and ownership succession.

Optimal Operational Succession

In constructing an operational succession plan, families should assess the business’s current governance and operations. Family owned businesses often face the challenge of balancing generally accepted management principles with how the business “has always done things.” Developing and implementing sound operational and governance principles, while recognizing some of the idiosyncrasies of family-owned business, can reduce frustrations when creating the succession plan.

The evaluation of company governance should include a review of the company’s organizational structure and governance documents. Businesses should amend, if necessary, bylaws, policies and operational manuals, as these written documents will guide current and future business operations and result in stable company governance while leadership and ownership transitions.

One key in formulating an operational succession plan is the communication of the roles to be assumed by future business leaders and the timeline of transition. Definitive strategies and written plans that outline leadership roles and the expectations associated with each should be established in collaboration with both incoming and outgoing family members.

The implementation of established operational and ownership succession plans can be done simultaneously or in stages. For most businesses, the need for operational planning precedes the need for ownership succession. Guaranteeing that the family owned business continues to be well-managed then allows the family to focus on the subsequent process of ownership succession.

When the planning focuses on ownership succession, the same principles of intergenerational planning and communication should apply. Defining each generation’s objectives for transition is essential as competing goals often exist and need to be balanced, along with the tax and legal implications of ownership transition.

Given the breadth of ownership transition options available to family owned businesses, outside assistance from attorneys, accountants, and consultants can be essential in evaluating these numerous choices and their impacts. Third-party assistance can ease stressful discussions amongst family members and provide a neutral voice in the event of disputes.

Once a plan for ownership succession has been developed, it should be reduced to writing, often in the form of a shareholder or buy-sell agreement. This document then acts as a guide for the implementation of the ownership succession plan but can be amended should circumstances change.

While challenging, succussion planning can assure a family owned business’s longevity and positive family dynamics while guaranteeing that the business does not provide the script for the next great TV drama.

For more information, contact Colleen Stumpf at MacDonald Illig Attorneys at 814/870-7752 or cstumpf@mijb.com

Lecom Health Breaks Ground On New Emergency Department And Intensive Care Unit

LECOM Health officials announced the groundbreaking of a 34,000-square-foot addition to the Millcreek Community Hospital in Millcreek Township that will create a new emergency department and intensive care unit.

The new emergency department will be located on the first floor and include eight treatment rooms, two trauma rooms, and six patient rooms dedicated to behavioral health. The second-floor intensive care unit (ICU) will consist of six new critical care patient beds, and 14 private medical/ surgical patient rooms.

“The investment in this project aligns with our continued mission of meeting the needs of the community, particularly the need for better, faster emergency care in a private and comfortable setting,” said LECOM Health Vice President of Surgical Services and Project Lead Anthony Ferretti, D.O.

The plans also provide a new emergency entrance and exit directly off Peach Street and a dedicated ambulance-only drop-off area. LECOM Health partners working on the project include Westminster Group Companies through JPI Development Partners, LLC; Perspectus Architecture of Cleveland, Ohio; Building Systems, Inc. of Erie; and Sanford Surveying and Engineering of Erie serves as the civil engineer. Construction is slated to be completed in late 2024.

For more information, visit lecomhealth.com

Northwest Bank Earns

GLOBAL RECOGNITION FOR ITS BRAND, REGIONAL HONOR IN CENTRAL PA

Northwest Bank, a full-service financial institution offering a complete line of business and personal banking products, recently earned global and regional honors, both for the second year-in-a-row. The Banker’s Top 500 Banking Brands ranking for 2023 includes Northwest Bank, while Pennsylvania Business Central selected Northwest for its list of Top 100 Organizations.

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Northwest Bank was among 30 banks that made the Top 500 Banking Brands ranking for the first time in 2022, debuting at 499th. For 2023, Northwest Bank ranked 491st on the prestigious list. The ranking is produced by Brand Finance, a leading brand valuation consultancy.

Pennsylvania Business Central’s Top 100 Organizations list is based on discussions with chambers of commerce directors and other community leaders to identify the most dynamic and consequential nominees in the area. Inclusion on the Top 100 Organizations list showcases the significant impact made by an organization to contribute to the vibrant economic and social life of central Pennsylvania.

For more information, visit northwest.com

URBAN ENGINEERS ACHIEVES ISO 9001:2015 CERTIFICATION

Urban Engineers recently announced that it has successfully achieved ISO 9001:2015 Certification. This certification highlights the firm’s commitment to developing and implementing a quality management system and business processes that are focused on client satisfaction and continual improvement, which are essential to delivering top-notch services to its clients.

“We are delighted to share the news that our firm has achieved ISO 9001:2015 certification,” said Kenneth R. Fulmer, P.E., president and CEO of Urban. “The certification underscores our pursuit of high-quality systems, processes and outstanding client satisfaction through continual process improvement.”

ISO 9001:2015 is a globally recognized quality management standard that is designed to improve client satisfaction through the execution of quality management principles, including strong client focus, process-based approaches, and continual improvement.

Urban provides planning, design, and construction services for highways, bridges, railroads, buildings, transit, airports and ports, in addition to environmental consulting. Urban maintains 16 offices in Pennsylvania, New Jersey, New York, Maryland, Connecticut, Texas and California.

For more information, visit urbanengineers.com.