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Mergers, CEO retirements, and succession planning: What's the relationship?

August 3, 2009
by Terry L. Stawar, Ed.D.
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A colleague recently pointed out to me how often mergers in behavioral healthcare organizations follow the retirement of CEOs with significant longevity. I was wondering why this might happen and came up with my own short list of possible reasons:

  1. For those less cynical than me, perhaps it is simply coincidental.
  2. The upcoming retirement of a CEO, who significantly influenced an organization, made the board and organization carefully reevaluate the organization’s needs for the future.
  3. Merger was being considered for some time and the retirement of the CEO cleared the decks for this to take place. When is a better time for this to occur?
  4. The board did not have a succession plan they feel comfortable with and merger was an alternative.
  5. The CEO did not have confidence in her/his subordinates and wanted to leave the organization in the hands of a trusted peer instead.
  6. Merger was a way to ram up and insure a substantial golden parachute for the retiring CEO.
  7. I have seen CEOs in the past who have great ambivalence regarding retirement and a merger might offer some way to stay connected to the organization as an emeritus consultant. This may be an excellent way for an organization to utilize the CEO’s experience and expertise. I also remember one CEO who stepped down and became a therapist/program manager in his own center. His presence was somewhat intimidating for the new CEO, who always seem to be anticipating the second guessing of all his decisions. A colleague of mine said that even the Romans could only afford one Caesar at a time. It was much like the university president I met who stepped down and went back to teaching and being a department chair.

I’m sure there must many other possibilities that readers can suggest.

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Comments

I think it can go both ways, greater objectivity, but also possibly greater possessiveness insiome cases.WIthout doubt these are critical transition times. Thanks for the comment.

Having just relinquished the Editor-in-Chief position from two other magazines at our firm but still writing for them, point number 7 resonates. You can have a lot of insight to offer but, in the last analysis, there can really be only one Caesar (even if the former Caesar sometimes has to bite his tongue).

Timely blog, I just had a conversation regarding merger with a colleague who is retiring. A couple of factors you identified played a role. I beleive that a retiring CEO is in the process of "letting go" and can see a better future for their agency without the trappings of pride, ownership and ego.
Just a thought...

Terry Stawar

President/CEO (LifeSpring, Inc.)

Terry Stawar

@tstawar

planetterry.wordpress.com

Terry L. Stawar, EdD, is President and CEO of LifeSpring Health Systems, a community behavioral...