I recently watched a really interesting interview on ACG’s Growth TV. Kathryn Mulligan, the Editor in Chief of Middle Market Growth magazine interviewed Jennings Cooksey IV, founder and managing member of JMTD Group, to discuss the sale of McCall Service, the pest control and lawn care company that has been in his family for more than 60 years.
I found their discussion insightful and very timely because Cooksey discusses how his family, as it was entering its 3rd generation of family ownership, made the tough decision that now was the time to exit.
These two key points stood out in particular:
In our experience, too many families put off the discussion of exiting their business far longer than they should. As Cooksey points out, it is only after a cadre of cousins, nephews and nieces take over and run the company into the ground that families finally have these tough talks – but by then it is too late and a fire-sale often occurs.
The Cooksey clan did it right. They pulled the entire family together (Dad, three Uncles, and 16 cousins) and had a wise conversation about the future of the business. Because of this family meeting, an investment bank was hired, and a perfect buyer was found for McCall Service (Rollins).
This is an ideal scenario, one that we see in our work as well. But sadly, as I said, often families stall on these vital meetings because of inter-family dynamics that impact the ability of one and all to make logical, impartial decisions.
Have you had a family meeting about your exit strategy?
Your company may not be in its third generation and have dozens of family members involved. No matter how many are part of the equation, having a meeting to discuss the future of your business is vital.
Another option to a 100% acquisition by a third party is a "partial sale". This is a great option in situations where some family members want to stay and continue running the business, while others want to be cashed out.
Private equity firms usually are fantastic sources for this kind of transition because family members who want to stay become part-owners of a new recapitalized entity and can reap the benefits of a "second bite of the apple" years later, while family members that want (or need) to exit can now do so. This also gives the organization access to new capital via the equity firm, possibly allowing for extensive new growth opportunities.
We recognize the family dynamics of exiting, especially in a company with multiple generations partially or fully involved. But it is crucial. Part of our success is the decades of experience our deal teams have in helping entrepreneurs and their families (and generations of family members) navigate this very challenging process.
Having a professional M&A team by your side is essential, especially during discussions like this. Listen to what a few of our clients have told us about the importance of planning an exit:
Keep in mind that there are two kinds of business owners and their families:
When you mix in multiple family generations, this becomes even more clear!
So, I would encourage you, as the Cooksey family did, to begin talking about how and when you want to exit long before you have to exit. And do so with intentionality and wisdom knowing that the legacy you leave behind will be valuable AND that, quite often, younger generations of family members have no desire to toil in the family business like generations before them.
To learn more about how we can help you and your family on a successful exit journey, please use the following links:
Carl Doerksen is the Director of Corporate Development at Generational Equity.
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I wanted to write you a quick letter to express our appreciation and our delight on the outcome of helping us through the process of our recent sale. We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.Terry D. Wickman, President, Keytroller
I quickly recognized that Don was working for Sharpe Mixers above all else, and held our interests above others.Jay Dinnison, Owner of Sharpe Mixers
Thanks again Phil and feel free to have a future client call me if they would like a referral. You are a true professional!Andy Graham, Vice President, Modern Heating & Plumbing
We will highly recommend Generational Equity and Musa Jagne to any business owner about to embark on the same process.Karen S. Williams, CFO, BW Manufacturing
Michael worked tirelessly, He followed every lead meticulously and urgently to make sure nothing was missed.Robert Evans, President and CEO of Mealtracker Dietary Software
I couldn’t have asked for a better team than Michael and Deborah. We couldn’t have done it without them.Robert Evans, President and CEO of Mealtracker Dietary Software
We thank you Eric and Generational Equity making our dream come true.Larry Moore, Owner, A Company Portable Restrooms
We are extremely pleased with the way Generational Equity handled the sale of our company. Your associates, Tom and Chris, did an outstanding job of getting us (me) through the process.Michael J Polarek, President, Paragon Packaging
I need to say an immense thank you to Don Ho for his stellar work ethic, attention to detail, and tireless effort. Also thank you to the whole crew at GE! Without you, Don could not do such a phenomenal job. We were shooting for closing and funding before the end of 2020, due to the uncertainty of the political landscape and taxes. I am happy to report we closed last week and will be funding tomorrow.Dr. Caty J. Catron PhD, RN, VA-BC – Owner, Vic The Picc, LLC
Tom Staszak is one of the most professional people I have dealt with in my last forty years of business. You’ve got a great group of people and you have built a truly professional organization.Michael J Polarek, President, Paragon Packaging
Greetings Mike. Thank you for the captivating and compelling presentation you made at the Phoenix presentation last week. Over many years in business yours was the most informative and well-presented presentation, on any subject, that I have ever attended! Your energy and enthusiasm combined with your concise and captivating support of your positions with easily understood examples and data was compelling.Pete L.
The help you provided us during each step of this process made us feel very comfortable and confident we were selecting the right approach to transition our Company.Andy Graham, Vice President, Modern Heating & Plumbing
I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.Bil MacLeslie, CEO, ipHouse
T.D., thank you so much! You are a great leader! I love how you are using your gifts and talents to better others. You are clearly a GREAT COACH! This 3 day session undoubtedly changed the future of our business, and very well may have been the sole catalyst to save my company, my health and my marriage! A genuine “thank you” from the bottom of my heart.Bryan D. Horn, Owner, Over Under Clothing
I am pleased that I was able to work with Andrew Byrd throughout this experience. From the first meeting we had in Minneapolis I felt that I was in good hands. His knowledge and expertise is second to none. He guided the process consistently throughout. I feel lucky that I was pared with Andrew and could not be happier that I chose Generational Equity to handle this major life event. Thank you Andrew and GenEq for everything!Eric Erlandson, Owner, Action Fastenings, Inc.
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.Ralph Noblin, President of Noblin & Associates
We were happy to see the interest in our company and what we cherished has not just a valuable company but an important company to the communities we served in.Larry Moore, Owner, A Company Portable Restrooms
We knew it would be a difficult task to have someone really understand our business and our market, prior to researching a possible buyer, so it was imperative that we found someone of your caliber, with definite proven experience in this area.Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
Generational Equity’s assistance was invaluable in compiling and marketing our business.Bil MacLeslie, CEO, ipHouse
We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
Thank you again for all your guidance and support. Any company will achieve what they intend, if they have you on their team!Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
The process was much more involved than I expected and your help, experience and advice was a big factor in making the negotiations go as smoothly as possible.Terry D. Wickman, President, Keytroller
I must say that I have never worked with a more driven, competent and focused individual as Don Ho.Jay Dinnison, Owner of Sharpe Mixers
Bruce and I wanted to take this opportunity to thank Generational Equity for assigning Musa Jagne to our transaction. In Bruce’s words, “Musa did one hell of a job for us!”Karen S. Williams, CFO, BW Manufacturing
Dear Chris and Andre, I just wanted to say thanks for all your help. Even though this process was not an easy one, it was comforting to know that I had a capable team standing beside me. You made me feel like we were almost your only client or at least the most important one. Thanks again, and I will recommend your service in the future.Shenille Engelhart, Owner – CLS Technology
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).Bil MacLeslie, CEO, ipHouse
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