The hidden cost of acquisition

Binoculars560

Tom was a proud father. After ten years in lesser positions at his business, his two children (Sara and Jim) were to begin higher level participation. Tom did have a lot to be proud about – his mom and pop shop had grown into a multi-million dollar enterprise that was a significant employer in an out-state town and his children had completed college and had chosen to be part of the family business. Continue reading “The hidden cost of acquisition”

Secrets Of Family Business Transition

ChartsStatisticsFamBizSm

Less than a third of family businesses transition successfully to the third generation.  70% fail or are sold.

Not quite 10% continue as active privately held companies for the third generation to manage.

It is our nature to think that a family business transition can be navigated by the founder and family without outside help (interference?).

Families are complicated, people are complicated, and business is complicated.  Combining personal, family and business decision making is exponentially complicated. Continue reading “Secrets Of Family Business Transition”

Worst Christmas Ever

shipwreckI was having a cup of tea with a business associate and they told me this sad tale.

Back in the late 60’s, three brothers took out a loan, bought used equipment, and started a small company in the north metro.

They did well, expanded, and upgraded their equipment. Around the turn of the century, the health of one of the brothers began to deteriorate so the other two bought him out. The ailing brother’s family could now provide the kind of care he would need more and more of and the business could afford it. He passed away six expensive years later.

Early in 2014, another of the brothers was diagnosed with the same illness. But the world is a different place now (post 9/11, the Great Recession, etc.) and the buyout offer was not so generous. Really not as generous.

The newly ailing brother wanted to accept the offer so as to not make waves. His family objected and questioned the terms, business valuation … basically the whole deal.

They wanted to be able to provide the same care at the first brother received without wiping out their family.

But that’s not what made for the worst Christmas ever.

There are several second generation players in the business and could soon be seeing the third generation in the business. Well, the son of the last of the three original owners has been peacocking around the front office and manufacturing floor. “The heir apparent” to the last man standing. And he’s been making the kind of statements that will make you cringe.

“Going to be a new sheriff in town.”

“Now we going to see how great this company can be.”

“I’ve been talking to my dad and we’re going to make some big changes.”

All while the family of the newly diagnosed brother are coming to terms with the hard road ahead.

Health issues. Money troubles. Either one is bad enough but taken together, they will bring you to your knees.

Christmas tradition is that the families of the three brothers gather over the holidays. In the past, it had been a time for family dispersements, bonuses, gifts, and much merry-making. This year it almost came to blows.

Don’t Bring This to a Closing

solar eclipseBefore I tell you the one thing you should never ever bring to an acquisition closing, I need to give you the background….

Company X was a successful company. Especially when you consider that on $3MM in revenue it spun off 30% in pre-tax profit. For over twenty years the owner, (we’ll call him Harold) ran and grew his business with savvy planning and shrewd decision-making. 

Harold’s only son, (we’ll call him Donald) worked in the business and had spent time in each discipline as he was being groomed to take over when Harold was ready to pass the baton.

Best laid plans and all that.

Harold was hospitalized after being diagnosed with advanced cancer and 24 yr old Donald was put in charge.

Fast-forward five weeks and Harold is back in the office part-time while working through his radiation and chemo regimen.

(It is important to know that company x is a small, 10-person niche manufacturing business with long-standing employees)

 Harold is in his office when five of his employees come in and shut the door. They say that they speak for rest and tell Harold that they will not work for Donald.  Donald has been derogatory and denigrating to the ‘peons’ for years. They had laughed Junior off as they were treated wonderfully by Harold, generously paid, and received abundant benefits for their good work.

However, during Harold’s hospitalization, Donald’s attitude had sharply worsened and more importantly, was observed doing cocaine at work.

************************ Continue reading “Don’t Bring This to a Closing”

Blog at WordPress.com.

Up ↑

INVISIBLE CHILDREN

Acquisition, the inside story

Pacquisitions's Blog

Acquisition, the inside story

Dan Stewart Media

Promote. Express. Create.

WordPress.com

WordPress.com is the best place for your personal blog or business site.

The Changing World of Employment

The blog presence of Vallon, LLC and our friends!

The WordPress.com Blog

The latest news on WordPress.com and the WordPress community.