Departing in Style: How to Successfully Exit Family Business Leadership

By Blair Trippe and Doug Baumoel

Estimated read time: 5 minutes

Tips for how departing leaders can exit and leave their business—and family—setup for success

Ending one’s leadership role within a family business can be immensely challenging. The sense of finality, of it being the end of an era, is palpable. The status quo, the known, is often much more comfortable. This is especially true when a leader identifies strongly with their position as founder of a family business. Who will they be when they are no longer in charge? This is a much more difficult question to answer than ‘what will they do? The often quoted, “you need to retire to something, not from something” speaks to the doing, not the being, and therefore offers little comfort to many exiting leaders.

But change is inevitable at some point. When family business leaders are armed with both greater perspective and a framework for transition, they have the opportunity to lead the family through its greatest challenge: succession. This is the leader’s path to transcend to a position of highest significance to the family and themselves.

Learn to be relied on for your wisdom, not your work

It is a prerequisite that any leader who is thinking about an exit feels confident in the next generation’s leadership skills and comfortable with how management will be structured when they depart. But, there is a danger that the exiting leader may not be able to fairly judge the capability of the next generation if s/he is not yet comfortable with their own departure.  The next generation may never seem ready to lead if the current leader is not ready to depart.  Or, the business may never seem organized or secure enough for a transition–if the leader is not ready to.

At some point in an entrepreneur’s life it’s important for the health of the business, and the family, for leaders to be relied on for their wisdom rather than their work. When departing the business, leaders should allow others to do the work so the next generation can learn how to build themselves into organizational leaders. The departing leader’s job, then, becomes to transmit or teach the benefits of a lifetime of experience and knowledge.

Depart in style

Once a leader becomes comfortable with the idea of being relied on for wisdom and not work, the question is no longer what happens IF they leave, but becomes HOW they leave. This is where the importance of departure styles comes into play. In his book, The Hero’s Farewell, Jeffrey Sonnenfeld talks about departure styles. A useful way for departing leaders to think about their departure style is through the lens of different archetypes. Departing leaders have choices in how they depart and, therefore, how their departure impacts the family business system.  

According to Sonnenfeld, the archetypes for departing gracefully are:

Ambassador 

The ambassador is happy to continue providing others mentorship or help from an advisory position. Position is more central to them than mission, and they seek new challenges that maintain their position (i.e. serving on other boards, writing memoirs or teaching).

Governor

The governor may have mixed feelings when they have either accomplished or advanced their mission sufficiently or realized that an alternative leader is needed. Governors tend to move into other areas of interest and leave the organization behind. They seek additional challenges that offer them opportunities to work and accomplish again.  

Serial Entrepreneur

These leaders are motivated by a combination of position and mission.  They see a beginning, middle, and end to their leadership role, and they leave gracefully when their mission is accomplished (e.g. going public), but prefer to enter new challenges quickly.

A few of the archetypes to ideally avoid when departing are:

Monarch

Typically deposed by revolution, they are not only position driven but also mission driven and believe their mission never ends━it keeps expanding. The business, to the monarch, is always worth more next year or always worth more than what someone is willing to pay today, so selling is unthinkable.

General

Leaves not by his/her own choosing, but by decisions of others (i.e. owners or boards or unavoidable circumstances). They look for every opportunity to re-engage and may use their influence to serve as active board members━available at a moment’s notice to step in again. Their mission is to lead, and by definition, that mission never ends.

There are no right or wrong styles, but if leaders understand their choices and are clear on how they want to depart, they are more likely to achieve their vision of what being a departed leader will entail.

How we can help

At Continuity, we help families be proactive in all aspects of succession planning. Our experienced advisors guide departing leaders and their families through comprehensive succession and exit strategies that consider all involved. We use specialized approaches to address the business’s sensitive issues and critical factors.

Learn more about our succession planning services and how we can help transition your company to next-generation leaders.