Many hedge fund managers may be surprised to learn that they are mortal.  But managers are being reminded of this unpleasant fact with increasing frequency by institutional investors requesting robust succession plans.  In one view, succession planning is part and parcel of the frequently cited “institutionalization” of the hedge fund industry.  By definition, institutions are not about any one person.  They may have a charismatic founder – a Sam Walton or a Ross Perot – but they can survive the death, disability or departure of that founder, and even thrive following such an event.  But more fundamentally, succession planning is about going from good to great.  A good hedge fund manager can generate consistent returns over an extended period.  A great hedge fund manager can create an institution that generates consistent returns over an extended period.  In other words, a good hedge fund manager is a good investor, but a great hedge fund manager is a good investor and a good businessperson.  Paradoxically, greatness in the hedge fund business – as in any business – requires the ability to render yourself somewhat irrelevant.  Service partnerships like hedge fund managers are inherently fragile because their primary asset is their talent and talent can be fickle, fleeting and, absent contractual restrictions, mobile.  See “Schulte Roth & Zabel Partners Discuss Non-Competition and Non-Solicitation Provisions and Other Restrictive Covenants in Hedge Fund Manager Employment Agreements,” Hedge Fund Law Report, Vol. 4, No. 42 (Nov. 23, 2011).  Moreover, talent at the top that is insufficiently diffused throughout the organization can result in a top heavy hedge fund manager, and one that is therefore easily toppled.  Accordingly, investors in hedge funds and acquirers of hedge fund management businesses want concrete evidence that a manager has mitigated the business risk.  A considered, workable and realistic succession plan is the best evidence that a manager has thought ahead.  Reasoning backwards, a succession plan is more than just a defensive document: it offers franchise value to acquirers, predictability to investors and long-term value to the founder and his or her heirs.  See also “Key Person Provisions in Hedge Fund Documents: Structure, Consequences and Demand from Institutional Investors,” Hedge Fund Law Report, Vol. 2, No. 37 (Sep. 17, 2009).  This is the first article in a two-part series that will outline key considerations for hedge fund managers seeking to develop and implement a succession plan.  This feature-length article discusses: why succession planning is an imperative for hedge fund managers looking to raise institutional capital and create long-term enterprise value; applicable regulatory requirements; the imperative of commencing succession planning today rather than deferring difficult decisions; examples of prominent hedge fund managers that have implemented succession plans; what types of succession events a succession plan should cover; people decisions, including how to identify roles to be filled and how to identify, incentivize and train successors; and the role of management committees in succession planning.  The second article in this series will discuss potential changes in a firm’s ownership and compensation structure designed to incentivize prospective successors to stay with the firm and to address the economics of departing founders or key employees; buyout and sunset provisions and the role of insurance; how to document and test the succession plan; how to communicate information about a manager’s succession plan with investors; and considerations with respect to redemption rights.