The struggle of a 2nd generation business owner
This is a story of Buck, a 60-year-old man who took over his father’s scrap metal business. His father started the business in the backyard of his modest home. Buck built the business up to about $10 million dollars in sales. When we met Buck, he had his three children in the business: Steven, a recent college graduate; Bill, who was working his way through college; and Mary, who was 30 years old and working in the accounting side of the business. We took them through the pre-succession process and found that as a group they did not have a congruent set of values, visions, or purpose. One by one, decisions were made so that the children would be liberated from the opportunity of succession. A key objective of the father was to begin to have the business become less dependent on him in such a way that he might be able to spend more time with his wife. We initiated a project designed to do exactly that. The resulting succession plan also was designed to grow the business for the purpose of sale or attracting private equity to it and gradually reducing Buck’s ownership. Well into the project, however, it became apparent that Buck had second thoughts and was going to do everything that he could to prevent the ultimate objective from occurring. As a result, Buck still owns and operates the business.
It seems that in some ways Buck saw himself as the caretaker for his father’s business. This is not an unusual situation. In fact, many second generation owners live with the thought of a meeting that will one day take place in heaven. When they get there they will be greeted by their father and their father’s first question will be, “How’s the business?” As a result, there’s frequently a strong emotional desire by second generation business owners not to sell the business or let the business fail under their watch.