By Michael Flynn, Esq. Senior Business Consultants, LLC & Strategic Business Recovery & Warren J. Rutherford, Rutherford Advisors, Inc. d/b/a The Executive Suite


Baby-Boomers and other business owners are divesting their Small and Mid-Sized Enterprises (SME) for various reasons. Absent a well-planned Business Succession Plan, decades of knowledge, innovation, and wealth can be lost both for stakeholders and society alike. Although Succession Planning has been a strategic management component for numerous years, only recently has it become recognized for its importance, particularly as it relates to the creation of value that renders mergers, acquisitions, and strategic alliances possible, thus resulting in the continuation of an SME’s past and current efforts. Only since 1991 has Intellectual Capital (IC) / Intangible Assets (IA) of SMEs start to become recognized as a trove of untapped wealth that could enhance the value and continuation of any organization. Notwithstanding the current difficulty in quantifying IC/IA, it is proposed that through the combination of strategic succession planning with organizational diagnosis may a forthcoming exit stakeholder identify internal business assets that may be improved upon to maximize value and wealth for the SME, while simultaneously improving the chance of transition success at the time of exit execution. Exploration of this subject matter may serve to provide Scholars and Practitioners fodder for theoretical/empirical research and practical application.

JEL:    A12; L22; L25; M10; O34

KEYWORDS: Baby-Boomers; Intangible Assets; Intellectual Capital; Organizational Diagnosis; SME; Strategic Succession Planning; Wealth.


 Value is created when organizations develop new ways of doing things using new methods, new technologies and/or new forms of raw material (Porter, 1985). However, it is difficult to find literature consensus as to what value creation is; the process by which value is created and the mechanisms to create, capture and retain value. We propose that creation, capture, retention and liquidation are four progressive and distinct processes. Alternatively, failure to maintain what value that had been created is ‘valuation depreciation’. Each of the four processes (creation, capture, retention and liquidation) may be examined from an individual, organizational and societal perspective. It is the individuals’ effort in developing or performing a task, product or process; the organizations’ efforts are usually directed to the introduction of a new or redeveloped product or process while society controls the nation’s industry infrastructure and the ‘will’ of competitive marketplaces in either accepting or rejecting the creation and capture of value (Porter, 1990).

Read the full research paper here: STRATEGIC SME SUCCESSION PLANNING vF