Good morning, yesterday I died…

Every year at the Berkshire Hathaway annual shareholders meeting the question of succession comes up. Attendees know that Warren Buffet and Charlie Munger will not reveal the identity of the chosen successor but do acknowledge that a successor has been chose and there are extensive plans in place for transition. Since Berkshire Hathaway has ownership in many companies Warren and Charlie have been through leadership and management transition many times throughout their tenure. They enjoy reflecting on their mortality and use it to bring some levity to the issue. Charlie is famous for musing that if he were granted one wish he would ask to know where in the world he would die and then never go there.

Warren likes to make reference to an envelope titled “open after I have died.” The letter begins: “Good morning members of the board of directors. Yesterday I died. The letter outlines the plan for installing the new CEO of Berkshire Hathaway and all the details the board needs to be aware of.

We use this illustration to highlight the importance of organization for business succession planning. When starting the succession planning process it is a useful exercise to write your own “Buffet letter” regardless of the size or structure of the company you own. In the process you may discover an issue you had not anticipated such as how to create liquidity at the time of transition. In addition to succession planning it is smart to review your business continuation plan on an annual basis to account for changes that may have taken place within your business.

The bottom line is that you can never be too organized when it comes to planning. Helping to achieve and maintain an organized financial life is one way we work with you to create more enjoyable moments that span generations.

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