NextGen leaders have a unique opportunity to increase the financial value of their company by driving three key conversations with the NowGen that can mitigate business (and valuation) risks.  Here are the risks and their counter-balancing conversations:

Valuation Risk – Revenue Growth

• How does the company grow? Are there new products or innovation?  Markets and technology change constantly.  Growth drives value.

Countering Conversation

• Spearhead the discussion about future product lines and highlight what you as the NextGen bring to the table. Innovation and insights can be borne out of fresh perspectives.
• Dream together about the future of the company – where will growth come from? What markets will you serve?  What do you need to do today to get there?

Valuation Risk – Key Person Risk

• Over reliance on one specific person (for customer relationships, technical knowledge, etc.). This drives down value due to higher risk.

Countering Conversation

• How will the transfer of this key knowledge or relationships take place? How will you know when you are done?
• Is the NextGen a good fit for growing into these roles? Are these roles best split between more than one position?

Valuation Risk – Engaged Workforce

• Finding a talented, highly engaged workforce can be challenging, particularly in a robust economy. This can limit capacity to grow.

Countering Conversation

• People burn out more from lack of growth opportunities than from feeling overworked. How can you reinforce a culture that supports growth opportunities at every level?
• How are future leaders being developed and engaged, so they can be retained and create a strong bench?

The NextGen can take a leadership role by driving these crucial conversations.  By mitigating these key valuation risks, the NextGen can help forward successful succession plans while also increasing the value of their family business.

 

Credit: Matt Rampe of Beene Garter