August 29, 2022

By Craig Arends, Managing Principal, CLA 

Heather Parbst, Director of Owner Transition Services with CLA, was a featured guest on Julie Keyes’ podcast, “Poised for Exit”. Heather has worked with family businesses in transition for several years and prior to that work was an entrepreneur with her own set of ownership issues. She’s also educated in counseling and psychology, becoming an adviser and consultant that people can turn to for holistic help during the process of ownership transition.

Heather says that owners should take a “windshield vs rear view mirror approach” to choosing and grooming a successor. Looking forward at where the company is going (or where you want it to go) can tell a great deal about the kind of leadership required to get there. Sometimes it’s hard to assess what kind of traits and skills the next leader will need. As an owner, your role has likely changed a lot over the years, and you grew along with it!  Asking yourself questions like “how has my job changed since I first started the company?” can be helpful ways to recall how your position and responsibilities evolved over time, which will help get into the mindset of choosing and grooming the next generation of leadership.

One thing Heather talked about that seems to be a common issue with owners on the transition path is refusing to leave when it’s time. So much of our identity as owners is tied up in the business; many owners ask “who am I without my business?” and are met with a blank canvas in their minds about what that could look like.

When an owner and a successor are preparing for the transition, it’s important to first identify the needs of the organization (currently and in the future based on growth strategy). Build the transition plan around those goals and needs, and then groom a successor whose skills and traits are a good match for the challenge. Too many times we tend to mold a position for the person, when it should be the other way around.

Craig Arends is a principal at CLA and is the managing principal of CLA’s private equity practice. Craig brings a concentration of experience in providing accounting and transaction structuring advice for leveraged recapitalizations, purchase accounting and SEC reporting, assessing quality of earnings, and GAAP accounting. He has far-reaching experience with critiquing financial models and reviewing target companies’ financial performance to identify cost reductions and/or operating efficiencies

Craig has more than 30 years of experience in public accounting serving public companies, private equity groups, and companies, including a term as principal in charge of a Big Four Capital Markets Group in Moscow, Russia.