Alese Stroud on Why Succession Plans Don't Have to Be a Hard Act to Follow

Alese Stroud on Why Succession Plans Don't Have to Be a Hard Act to Follow
Alese Stroud (Jason Burt)

Alese Stroud, a White Hall native, is founding CEO of Corporate Insight Strategy and a partner of Vortylon, an exit planning consultancy. She has decades of experience with acquisition integrations for top 20 banks.

Stroud graduated from the University of Arkansas on a National Merit Scholarship, earning a Bachelor of Arts degree. She is a graduate of Leadership Greater Little Rock Class XXI and Leadership Arkansas Class XII.

Stroud is a member of the Arkansas Academy of Computing.

Please explain the “silver tsunami” and its ramifications on businesses in Arkansas.
The “silver tsunami” is a term coined in the 1990s to describe the impact of mass retirement by the baby boomers. Businesses are impacted in a variety of ways by this huge generation exiting the workforce. Companies in health care are seeing a dramatic rise in demand for their services. Other companies are seeing demand drop. All of them are impacted by the reduction in available workforce.

The impact I find most concerning relates to the 12.3 million baby boomer business owners who will be exiting their companies in the next few years. Some 50 percent of those exits will be unintentional and therefore poorly executed and prone to fail. Those will come as the result of death, disability, divorce, distress or disagreement (with partners or shareholders). When businesses fail, especially in such large numbers, it is a blow to our state’s economy. The loss of jobs and tax revenue creates an impact our state cannot easily absorb.

How risky to businesses is transitioning from one owner or set of owners to another, whether that’s because of a company sale, a merger or a retirement?
Transitioning company ownership is exceptionally risky business. No matter the reason for change, the transition creates chaos. Companies without the right planning, processes and preparation will struggle and likely fail. Depending on how you define failure, mergers and acquisitions are known to fail between 50 and 83 percent of the time. Even generational transfers within families create so much chaos that they fail more than 70 percent of the time.

What’s the most common mistake business owners make when it comes to succession planning?
The biggest and most common mistake is to pretend your exit is not going to happen. Owners often say to me, “I’m not retiring for at least five or 10 years. I don’t need to plan now.” That’s sticking your head in the sand. Owners should be talking today to their spouses, their children, their partners, their leadership team, their board, their stakeholders and an exit planning professional. Anyone affected by an exit should be part of the conversation. Success results from hearing all of your stakeholders and structuring a plan with everyone’s needs considered.

Sadly, fewer than 5 percent of exiting owners make time for these conversations. Part of this mistake is the assumption that your exit will be intentional. We previously mentioned that at least half of them are forced by circumstances beyond the owner’s control.

How does the up-and-coming generation of business owners and executives differ from the baby boom generation of owners and execs?
The new generation of business owners and executives view the world differently. They embrace technology and data in new ways. They define work differently. They have differing expectations about when, where and how long they work. Their expectations create an office culture profoundly different from the one created by old-school baby boomers. Executives are trading the corner office and the walnut desk for a standing desk workspace out in the open with all the other employees. That, in itself, signals massive change.