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Bailey McCann, Opalesque New York:

As the hedge fund industry matures, more founders are moving toward retirement, which can lead to uncomfortable situations with investors if a succession plan isn't in place. According to delegates at the recent Opalesque Baltimore Roundtable, succession planning requires working with investors and young leaders in the firm to grow a new generation that has a strong alignment of interest with investors.

"That is not an easy challenge for most firms," says Corey McLaughlin of Arthur Bell CPAs."You don't want to give a team too much wealth overnight so that your team stays focused and motivated. Investors really want to see a motivated group and have confidence in them and that process. The trick is to enable your team to build that wealth so they can buy the shares over time, commit long-term to the firm, and make sure that it’s in good hands as it moves forward."

"Obviously, with a family business, you go through transitions of generations, and you have to figure how to retain the staff that can take you to the next level. And then additionally, who of the family can also be there with you. Tenure is also important," adds Gene Parke of Continental Realty Corporation. "I believe it is important to our investors, that our team has been with us for a long time."

On the investor side, succession planning is cropping up throughout the diligence process. How firms structure buyouts can be a key focal point for investors, a......................

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