It turns out the one percenters are just like us. Or, to put it another way, we’re just like the one percenters, as the riveting HBO TV series “Succession” has revealed for the last four seasons.
The final episode of the series, which follows an ultra-wealthy, ultra-dysfunctional family who owns a multibillion-dollar conglomerate, aired on Sunday night.
“In a lot of ways, ‘Succession’ is a grand example of things that are playing out in many American lives and American businesses,” argues Monique D. Hayes, a bankruptcy attorney and partner in DGIM Law, in an interview with ThinkAdvisor before the finale.
“It’s an absolutely accurate depiction of what happens in a business if there’s no clear succession plan … and when people allow their family dynamics, grudges or disputes … to override business decisions,” says Hayes.
Ambition, power plays, backstabbing — this is the stuff of “Succession,” at its core, a cautionary tale exposing the mega-wealthy and deeply flawed Roy siblings, scions to the huge family business. After the death of family patriarch Logan, who among the young Roys — Kendall (Jeremy Strong), Siobhan, aka “Shiv” (Sarah Snook) and Roman (Kieran Culkin) — will head the empire that he built from scratch?
Alas, Logan hadn’t established a succession plan, which sparks an epic power struggle, replete with infighting, deceit and betrayals.
Indeed, in the real world, succession struggles are commonplace and widespread. “If you don’t have a succession plan, you’re planning not only for failure but for chaos,” Hayes, experienced in asset sales and acquisitions and fraud litigation, among other financial areas, maintains in the interview.
Without a plan, the stage is set for “exploits and oftentimes betrayals,” the attorney points out. Hayes, who often develops succession plans with clients, discusses lessons that financial advisors can learn from the TV show to help their business-owner clients, in particular. She also delves into the succession issue, among others, with respect to the “great wealth transfer” from baby boomers to the next generation.
In the interview, Hayes, co-chair of the American Bar Association’s Business Law Section Chapter 11 Subcommittee, provides specifics about setting up a succession plan for a family business and what to do if no family member is seen as equipped for the top job.
The lawyer also emphasizes the repercussions of failing to have a will. As many as 77% of Americans do not have one, she says.
Hayes spoke Friday by phone from her firm’s base in Miami.
The attorney adroitly related the quest for power by the Roy siblings, each obsessed with wanting to run Waystar Royco, to those same struggles in the real world.
Here are the highlights from the interview.
THINKADVISOR: “Succession” was a fictional TV drama series studded with black humor. How does it compare to real life?
MONIQUE HAYES: In a lot of ways, “Succession” is a grand example of things that are playing out in many American lives and American businesses. There are a lot of similarities and a lot of lessons.
What does “Succession” get wrong about succession planning?
I think it gets a lot of things right. That is, it’s accurate in terms of what happens. It’s an absolutely accurate depiction of what happens in a business if there’s no clear succession plan. It’s an accurate reflection of when people allow their family dynamics, grudges or disputes over the years to override business decisions — they can’t get over what happened when they were kids.
What’s a key takeaway for financial advisors to help their business-owner clients?
The first thing is that it’s important to have a succession plan. If you don’t, you’re planning not only for failure but for chaos.
Logan Roy, the patriarch on “Succession,” didn’t have a succession plan. That made for a big mess because his children were vying for power [to become head of the company].
Any time you gather ambition and family dynamics as well as business objectives, if there isn’t a structured plan and design not only about the company’s operation but the ownership and for how it’s going to be transferred, there are exploits and oftentimes betrayals.
You find people betraying the mission of the organization for their personal ambition. That happens in a corporate setting or any other scenario where you have human interaction and competition.
What’s an example of a betrayal on “Succession”?
The brothers Kendall and Roman have decided to be [temporary] co-CEOs and told their sister Shiv that she would be looped in on all major important decisions, that they weren’t going to cut her off. But they did that exact thing when they decided to obstruct the sale of the family business. They didn’t tell her.
She finds out, feels betrayed and starts angling and supporting their competitor, giving them information that impacts the negotiation.
Again, there should be a proper and well-documented succession plan. You want to have trusted advisors within and outside the organization who understand what the plan is so that there’s no question about subsequent change.
You may decide to include the designated successor in the plan, but even if you don’t want to disclose to the person the extent of their succession, you absolutely want to have it documented.
What should the owner focus on in establishing the succession plan?
Taking an honest look at who is in the organization today and the skills they have to carry it [forward], the temperament they’ve demonstrated in terms of leadership, the trust they have [instilled] among the other key employees and with relationships with outside parties, like lenders and vendors.
It has to be someone that’s going to command respect and trust.
What if no one fits?
Sometimes you do find you don’t have anyone that’s ready today to fill that shoe. Then the question becomes whether you’re going to develop someone internally or plan for an outside person to come in with the skills, acumen, trust and commitment to the mission that you, the patriarch [or matriarch], and the board of directors think is necessary to carry on the organization.
Would the board have agreed with Logan’s choice, if he’d made one?
There was always the assumption, because of everyone’s respect for Logan, that both the board and the rest of the family would have yielded to his pick.
He had such dominance over them that they would have yielded, or he would have forced their submission, as he’d demonstrated [in business] because of his ability to outthink and outstep even the kids.
The problem is, he didn’t even know. He hadn’t made the final decision at the time of his passing.
When Logan suffered a stroke, the company’s stock dropped: People thought he might die. What’s the danger when the company head overtakes the organization in importance?
If you’re a public company, your constituents should be confident that there’s a team of people that keeps the lights on, the business running, that there’s no one person that’s wholly responsible for the success of the entity.
If the business is wholly dependent on one person for its success, that’s a problem.
Can you cite any real-life scenarios that address this?
Often, when a dynamic person heads an enterprise, people associate it with that person. Right now, Jamie Dimon [chairman, CEO] of JPMorgan Chase is an example of that. People want to know that there’s going to be a designated succession plan.
Michael Bloomberg [former mayor of New York and co-founder and CEO of Bloomberg] has been very vocal about the importance of succession.
He’s [directed] everyone on his team to have a designated successor and for that successor to have a successor, and that there should be a plan for developing successors over time — not when you need one. That should be done in advance so there’s public and internal confidence.
How does corporate governance work into succession planning?
A corporation has bylaws and policies about who selects the next leader: Is it the board of directors? Is it the founder, and do they have veto power? That should all be documented. This was the issue that played out in “Succession.” Was Logan going to handpick his successor, or would the board have some say in that decision?
It turned out to be a free-for-all, which led to chaos and backstabbing: the two brothers, Kendall and Roman, and Shiv, their sister, each wanted the role.
Eventually, Kendall and Roman came together and decided they were going to be co-CEOs and negotiated support from the board. They had to do that because there wasn’t a planned document or a process in the governance documents.
At one point, Logan was going to sell the business, a move that would have cut the siblings off from the company. Seems rotten. What do you think?
It depends. These people [siblings] had tremendous wealth already, and Logan’s position was that he built his company from scratch with no support. So why shouldn’t his children have to do the same thing?
That’s not an unfair question. There’s an enormous sense of entitlement in these types of families, whether big corporations or small businesses.
What if it’s a publicly traded company?
Then you have responsibilities to let the shareholders pass the business on to the person or persons best capable to maximize the return to the investors — and not [necessarily] a blood relative.
You may look at your kids and say “You’re not it.” You may recognize that giving control and ownership to one of them may destroy the family or destroy the business.
So you may think it’s just better to sell it and let [the children] take the money — but the business lives on, without the infighting. You have to think about the investors.
Doubtless, lack of a clear succession plan for a public company can lead to corporate instability. Correct?
Absolutely, and it takes a hit in the stock market because it’s not clear where the company is going when the leader has passed.
Some key employees may say, “I’m going to go to a competitor because this ship may not be sailing for very long.” Investors may say, “I want to pull my investments because I don’t want to lose money while they figure it out.”
Did that happen on “Succession” following Logan’s death?
There was an initial pullback and stock loss, but Kendall, with charisma and cunning, was able to make a presentation that regained public confidence. However, the internal stability was still there.
America’s “great wealth transfer” — mainly baby boomer wealth — has begun. Will there be chaos in families that don’t have a clear succession plan?
Absolutely, because people will fight over anything: the house, the couch in the house. If there’s a business, everything becomes a power struggle. But this is avoidable.
In the United States, 77% of people do not have a will, but most wealth here is inherited. Not leaving a will means there isn’t a plan for how that wealth is to be transferred.
Therefore, much of it will be lost to legal fees, fights within the family, taxes and possibly to third parties that [refuse to release funds to family members]. It happens every day.
If you have assets — the level of wealth is [immaterial] — you should have a documented will on what you would like to happen to those assets.
If you have a business, you should have a plan for not only who you’d like to own the business in the future but also who you’d like to run the business. That may or may not be the same people.
So you have to make some difficult decisions and set aside emotions.
What else needs to be considered in this context?
I tell people of significant wealth that it’s not enough to just leave a ton of wealth, especially to young people, because wealth can be a burden.
Sometimes people don’t know how to manage it; or as a result of the wealth, they become a target and victim of other people who come out to manipulate them for the money.
How can one protect against that?
By having a design of how the wealth will not only be transferred but preserved over time. It’s about the legacy you want to preserve. So you do everything to make sure that the money doesn’t overcome the people.
Sometimes a sibling will contest a parent’s will if they believe they deserve a larger portion of the wealth than another sibling. How can that be prevented?
There are ways to preserve and protect your plan from disruption.
In our practice, if a client wants to leave out a particular child, we make sure that it [doesn’t look like] an oversight: The document is clear that this was a decision that was made.
Then we add a no-contest provision, meaning that there are consequences to people that contest the will, such as losing everything [their inheritance] or losing a percentage that was left to them.
How would you sum up the lessons that can be learned from “Succession”?
Be sure to not fall prey to ego and family drama but to have a very clear focus and objective of the mission and then plan around that based on the current realities and objectives of the organization — not what you hope for, not what you wish for, not what you wish your children or successor would do.
You absolutely need to have a good legal team to document it all.
Have you an expectation or hunch of who’ll be the successor CEO?
My guess and hope is that Shiv will have a more leading role in the company because she has business cunning and the ability to read and direct people, very similar to what her father demonstrated.
Those were the exact abilities that allowed Logan to bring the company up to the level of a multibillion-dollar enterprise.
He would look at the internal struggles and behind the scenes and direct or orchestrate an outcome.