Real World Stories

The stories that follow are true. However, they have been summarized, simplified and sanitized in order to highlight key business succession realities.


Free At Last

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.


Garbage In-Garbage Out

The complexities of family dynamics

We recently ran into a situation where a business owner had the help of some very sophisticated, mechanical counselors and he created a succession plan that seemed to make sense to him. It was a complicated situation because this gentleman was remarried to a younger woman. His son from his first marriage was a minority partner in the business. His new spouse was the same age as his first son. In addition, he had two young children from his new marriage. A very complicated succession plan was structured such that someday it would put the son from his first marriage into a business partnership with the children of his second marriage. When his young children enter the business, his older son would be around 60 years old. In the meantime, if his father passed away, he would be partnered with his dad’s second wife. This was a perfect example of a plan that was put together without first testing the owner’s fundamental succession objectives. After careful analysis, it was concluded that his estate plan would only work well if he lived indefinitely in order to manage and control these complicated family dynamics.


Or Else

The choice of business or family

Bill started his technical services business when his children where 3, 1, and -1. His wife fully supported his desire to strike out on his own. So, for the next twenty years he immersed himself in developing his service offerings, cultivating new customers, enhancing the skills of his employees, taking on institutional investors, and so on. The business had become the central element of his life. His standing within the local and professional community was based on his company’s reputation and his role within the company. Because his firm did business around the world, Bill would leave the house either Sunday night or Monday morning and usually returned either Thursday or Friday night. For all practical purposes, his wife had become a single mother. As a result, his relationship with his family had gradually become distant, strained/weakened, and almost businesslike.

Somewhere during the twentieth year, Bill’s wife began to let him know, in various ways only a loving wife can, that she had had enough of this absentee marriage and family life. It became clear to Bill that it was either his business or his family. He chose his family and, through our process, began a business succession process that focused on the preparedness of his family, his personal finances, the business, and himself. Today, the business is owned by his management team (together with its institutional investors) and is operating well. Bill and his wife now have a strong and close marriage. Bill finally got to enjoy watching his middle and youngest children play high school and college sports and he was able to take the time to deeply participate and truly relish the wedding of his oldest. Bill enjoys his life after business succession and is professionally active through consulting and volunteer work. The experience taught Bill the importance of coming to grips with one’s purpose for being here on earth and getting on with it.



The life goals of a successor

Several years ago we went into a business and were greeted at the door for our appointment by the 55-year-old son of the owner. As we were surveying the business, we noticed some very unique art that was decorating the office. In the course of the conversation, we asked the son about the art. He told us that he was the artist. He was a shy, introverted man who seemed somewhat troubled. His 80-year-old father had started the business and sincerely believed his son would be his successor. After several interviews, it was determined that the son was suffering from depression that was impacting his physical health. It seemed that he always wanted to be an artist and, in fact, had the soul of an artist. His father did not see art as a real career. In subsequent conversations, we discovered the father had wanted to get out of the business years ago but was staying in the business because he felt he had to do so for his son. Interestingly, they had never had a conversation about this issue until then. Through our pre-succession planning process, it was decided to begin preparing the business for sale. Dad was going to share the proceeds of the sale so the son could pursue the rest of his life in art. Prior to our meeting, they had spent over $100,000 in legal bills preparing a very sophisticated estate plan. In addition, they were spending over $100,000 a year in life insurance premiums to fund the transition. If this conversation had taken place 15 years earlier, all of that money would have been saved.


See No Evil, Speak No Evil, Hear No Evil

The harsh reality of succession

This is a story about a gentleman who started a small manufacturing plant after World War II, a typical depression and World War II guy. He went to school on the GI Bill, got out, and started a little machine shop in his garage. Over the years it grew into a significant business during which he had invited his two sons, Brian and Barry, to join the business. When we met him he was in his early seventies. His two sons had been underperforming for years, but the owner was feeling pressure to do some planning because Mom was ready for him to retire. The problem with Brian and Barry was they had both developed serious drinking problems. All of the members of the mechanical succession planning team (accountant, bank trust officer, attorney, and financial advisor) knew they had drinking problems. Throughout a year-long planning process, they all worked with the family pretending that they did not know the truth. A perfect mechanical estate plan was drafted and the owner began to shift stock and responsibilities over to his two sons even though he was not financially independent of the business. Within a year, the two sons were at war with each other over control of the business. Soon thereafter, Brian’s drinking problem became so problematic his wife divorced him. The responsibility for the business fell on Barry. Within three years both of them had had alcoholic induced breakdowns, resulting in the business suffering to the point that it was not recoverable. In the meantime, the father had a heart attack and was in poor health. The bottom line was that the business failed and the retired business owner had to go back to work for a friend in order to pay his monthly bills.


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