In January 2008, my father, uncle, and I finished the transition of our concrete construction company from their ownership to mine. Unlike many stories about families being destroyed, long-time acrimony developing into full-fledged feuds, and business splits occurring, I am proud to say that ours was relatively painless, well executed, and, possibly even strengthened our family bond.
Outlined here are some of the lessons I learned, both positive and negative. Hopefully this can help others in the industry that are going through a similar transition with their concrete construction company.
The first thing that made our transition a success was planning. My father and uncle started planning for the transition back in 1998 while I was still in the Army. The planning, however distant, was relayed to me every couple of years. When I left the U.S. armed forces, I joined the business and a more intense preparation for the transition began. Still, this phase of the transition took five years. From the point of view of my father and uncle, flexibility was a key component. They had several plans depending on my level of interest over time, as well as that of my sisters. By having several rough plans, they were able to hone in on the most viable one as events developed.
Another critical component of transition planning involves understanding the expectations of all parties in the company. Everyone has different experiences and roles within the organization. My uncle has children who are much younger and had to be provided a fair opportunity in the transition. I also have two younger sisters who are not in the business. Expectations are unique with every family business, but every family-owned company has them in one manner or another. Regardless of who the players are, the most important part is the family, which can make or break the transaction. Someone in the family, preferably one of the current owners, must step up and be the champion of the transition to push it through both the easy and the rough times.
Communication and a third party to help “grease the wheels” are critical to ensuring an overall sense of fairness in the transaction. Here comes what we all hate to admit: we needed the help of attorneys and accountants. It took us nearly six months to develop the most advantageous tax structure for all involved. We spent more than $20,000 in attorney fees developing this structure, but from our original vision, all parties involved will save more money than that every year because of the attorney's expertise. Also, a good business attorney deals with transition planning and business-related issues every day and can anticipate many of the problems that may arise.
The last, and probably most important, item that families need to realize going into a transition is the obligation to the business' employees. These are the people who have followed the exiting generation's vision and helped the company get to where it is today. They are the people who will be responsible to carry out the incoming generation's vision. They are counting on your family to ensure that the company's vitality is preserved. Success cannot be accomplished when family members are looking out only for their own interests and not the good of the company as a whole.
I am privileged to have worked for two great men—my father and uncle—and now I am privileged to carry on their work in the company they built.
Chris McDaniel is vice president of operations for McD Concrete Enterprises, Silver Grove, Ky. he can be reached at 859-441-8588 or at email@example.com