The NFL’s Tennessee Titans have been capturing headlines for more than just football lately due to some ongoing ownership issues.
The Titans’ woes began in October 2013 when team owner Bud Adams passed away. In accordance with his estate, the ownership of the Titans was transferred to a trust that was owned equally by his two daughters and the children of his late son. The structure prevented any one family member from controlling the actions of the team and therefore violated the NFL’s requirement that one person retain clear and legal control.
The family members have agreed to give control to one of the daughters, Amy Adams Strunk. But they have yet to transfer actual ownership to her, which has left the NFL feeling uneasy. To exacerbate the turmoil, the team fired its head coach, Ken Whisenhunt, in November and recently announced the firing of general manager Ruston Webster.
So what are the implications of these events? For starters, the Titans finished this season 3-13 and at the bottom of their division, leading to the decision to fire the head coach and general manager. In the search for replacements, the team struggled to attract talent. The uncertainty about the future ownership made it difficult for the team to bring in the candidates it really wanted. And it remains to be seen whether that uncertainty will translate to an on-field distraction for the 2016 season.
As for the family, getting the ownership structure in compliance with the league standards is going to be costly and their options at this point are limited. Amy Adams Strunk, the front-runner for taking over majority ownership, could buy out the other family members. But to date, that has not been viewed as economically feasible. Or the team could be sold, an avenue the owners have been adamant about not wanting to pursue.
This situation is unfortunately not an uncommon occurrence among family-owned businesses. In fact, Kreischer Miller’s recent Family Business Survey found that just over half of respondents do not have a succession plan, despite the fact that 62 percent of senior generation owners are planning to transition their businesses in the next ten years. While the consequences for your business may not be as high-profile nor as high-stakes as for the Titans, you don’t want to see your years of hard work upended by not having a plan in place well in advance of when it is needed.
If you haven’t finalized your succession plan yet, or if you haven’t yet begun the process, there is help. Here are a few pointers:
- Identify your motives, desires, needs, and expectations for the transition.
- Be flexible in your transfer strategies.
- Think about what life will look like – both financially and emotionally – after the transition.
- Seek good advisers to help ease the transition and offer insight from past experience.
But the most important piece of advice? Don’t wait. We encourage our clients to allow ample time to go through the process, in the range of 7-10 years. But even if they have a shorter time horizon, we can still help them create a solid transition plan that will work for the departing owner and the business.