Beginnings are tough! For many owners of a business, succession and the planning it entails is the equivalent of planning their own funeral. The fact is that the transfer of power from one generation to the next, or the selling of a business, seldom happens while the founder is alive and still on the scene.
Regardless of which generation is involved, if you have made the decision to sell your transportation business, the succession transition is one of the most agonizing processes that an owner or a Chief Executive Officer of a trucking company, has to deal with. When you hear the term “successor planning”, you automatically assume that it’s going to be the shift of responsibility from one generation to the next, or the shift of generation from one family to the employees. That’s not necessarily the only way to establish a successor plan.
A successor plan involves a process of:
- How you plan to exit the business?
- Making a determination whether the business will be sold to family members, or if you are going to create an Employee Stock Option; or
- You decide you are going to sell to an outside party.
More than 80% of all business enterprises in the United States are family owned. Nearly 35% of Fortune 500 companies are family owned. In the trucking industry, 60% or more of trucking companies consist of 1 - 99 trucks.
Whether you expect leadership to change in the near future or not, it’s never too early to begin preparing for the crucial step of the company’s longevity. In Ahern’s consulting process, we are asked many times, “When should I start planning to exit the business?” The response, “The day that you start a business.” The day that you start a business, is the day that you should start planning your exit strategy - unfortunately, most people do not.
If you are a family-owned business, and you want to pass the business on to your children, you must recognize that you must look at your children as they actually are, not as you perceive them to be. In order for a family-owned business to survive, the family must accept the fact that “like it or not”, everyone in the family, whether a shareholder or not, manager or non manager, is ultimately tied to the future of the business. These individuals are the major source or weakness of a family business. In many situations, their commitment, competence, and understanding of the business are not inherited, but learned.
If you own a business, and it’s a family business, you need to have a clear understanding of the following questions in order to establish a successful exit strategy. These can be identified in 9 areas as key steps to guide discussions, to begin structuring a smooth transition plan.
- Who are the motivated successors?
- Do they possess the knowledge and experience beyond that of the owner?
- Is there an organizing harmonious team of key managers?
- Do they approach their responsibilities professionally?
- Do they agree to accept new leadership enthusiastically?
- Does the company have competent advisors who understand the dynamics of the business and understand the successors?
- Are these advisors willing to move the business through the challenges that the business will face in the future?
- Is there an easy and rational ownership structure? One that’s not confusing and one that does not simply state: if you are born in the business, you are entitled to the business.
- Are the successors accommodating to the needs of each other in the business? Can they cooperate and work together; can they agree to separate themselves from the business?
- Last, but most important, who will take over the responsibilities of the President?
Many times, Ahern is involved with an owner who has multiple children in the business, and he or she is afraid that there will be conflict if the parents choose one child over the other. I explain to each client that’s going through this process that you need to do some “selective pruning”. Therefore, you need to set measures for consideration, and you need to measure your children, based upon those considerations.
- What are the successor candidate’s personal goals?
- Does he/she know who they are?
- Will they stand in the way of or encourage family business leadership?
- Has the successor learned about the business?
- Is he/she a “quick study”?
- Has the successor practiced good money management in life and work?
- Do they have outside experiences that prepares them for the challenges of a family business? And
- Can they learn from their mistakes?
Also, as part of the process of reviewing your children, it is vitally important that you observe the way they handle themselves under pressure.
- You must watch and observe how each child approaches tough decisions;
- How he/she solves problems;
- How they meet responsibilities; and
- How they handle ethical challenges.
Additionally, it is also important that you have a competent Board of Directors that can assist your company through this process. Ahern has assisted many family business in transferring control from one generation to the next, but it is a process that takes time, thought, and patience.
Arkansas Transit Home, Inc. (ATH) was founded in 1958 by my late father, Wendell Chandler. In fact, to Illustrate how long that is got most trucking companies, our DOT number only has five numbers.
I would like to thank you Andy for making this very important and life changing event possible. It was a great experience.
Arkansas Transit Homes, Inc.
We have worked with you and your colleagues at Ahern Associates for some time now. We find your expertise in the area of logistics (be it in consulting or based on being hired for acquisition analysis) to be out standing. We value the relationship and are very happy to give you this letter of reference..
You should feel free to have any party call us to discuss our experience.
Benesch Attorneys at Law
England has been formally associated with Andy Ahern and his colleagues for approximately the past three years primarily in the area of acquisitions. During that period, we have experienced a professionalism that is refreshing. Andy offers in-depth expertise as well as industry knowledge born from extensive experience, a combination which adds material value well beyond a normal business relationship.
We anticipate a long Ė term, mutually beneficial association. It was a great experience.
Very truly yours,
Keith c. Wallace,Jr.
Senior Vice President / Chief Financial Officer
C.R. England, Ind
Century Carriers, Inc. and its subsidiaries are family owned businesses that was started 1998. When the Transportation business was booming, times were great but, like other family owned businesses we didnít prepare for the economy the past year. My wife and I lost many hours sleep and made many calls to attorneys, banks, and whom ever would listen to our story trying to figure out how we were going to save our business for our future and our children.
Andy and his team has given us hope that there is light at the end of the tunnel and we are making progress, thanks again.
Kevin Henderson, President/CEO
Century Carriers Inc. / Century Expedited Inc.
Originally, I met Andy at a Truckload Carrier`s Conference during a round table discussion on the transition of family business. Andy was very knowledgeable about the topic and expressed many ideas that we hadn`t thought of. During the down turn of our industry in 2001, We called upon Andy, as a consultant, to help us understand how to turn our business around. We hired Ahern and Associates to come in and do businesses review. By giving us a road map to success with their intial audit, they helped turn our business around within thirty days.
Andy Ahern and Ahern & Associates have always delivered exactly what they have promised.
Don Christenson, President
Christenson Transportation, Inc.
We have thought about selling our business one day, but we really didnít know much about how to go about it. Your company contacted us a few months ago about a client of yours that was looking to buy businesses like ours. Now just a few months later, the sale is complete. Everything went very smoothly, Ahern was there to guide us through the beginning of the process. We are very happy with our whole experience with Ahern, especially Andy and Brian. They gave us personal attention any time we had questions or concerns.
John & Jennifer Rainney
I wanted to thank you for your guidance, leadership and support. The professionalism and dedication of you and your staff is outstanding. The knowledge you posses of the transportation industry and its inner workings was been a huge asset to us in our time of transition. With your assistance we have been able to make significant changes within our company to improve structure and productivity. Aherns onsite visit and detailed evaluation of our company has been a very valuable tool. The outside look at how we do business and the suggestions you've made to improve our overall performance have been very valuable. All of your advice and direction has been thoughtful and caring, I feel that you truly care about our business and success. You've done everything you said you would do and then some, working with you and your dedicated staff has been a pleasure and will improve the productivity of our company. I look forward to a long relationship with Ahern and Associates.
Specialized Business Solutions. INC