May 2021 MiMfg Magazine 17 part of the business was sold to an outside investor which created a “ much needed ” liquidity injection .
“ If you think about it , that ’ s not a bad way to go about it ,” says Jeff , “ Going to build up my management , going to take a step back and going to create some liquidity for myself . In retrospect that could have been the plan ! I ’ m just 100 percent confident that he wasn ’ t thinking about those things at the time .”
Most companies will typically have no succession / transition plan in place , according to Vincent Mastrovito from MMA Premium Associate Member Prometis Partners . Much of his job as a Family Business Consultant , therefore , involves education about the process and examining options . Examining the company from a financial and personnel standpoint are equally important .
“ Where a lot of business owners get hung up is that there are always two sides to every valuation [ of the company ],” says Mastrovito . “ There ’ s your tangible side which includes your profit and loss and balance sheet , cash flow and so forth . But then you have intangibles to think about such as where is the company owner ’ s mindset , what is his relationship to the company itself , are there other family members involved . That ’ s a pretty important part of your planning .”
A surprising challenge that Mastrovito often runs into is successfully engineering the exit of the company owner . A survey conducted in 2012 indicated that 84 percent of businesses are considered “ too dependent ” on the business owner for the main functions of the company , whether that be sales , operations , management or likely some combination of multiple core aspects .
“ So that statistic alone should tell people that most businesses are so dependent upon the owner in a lot of ways because he or she may not want to give up or relinquish those roles , or there ’ s no one there to take them ,” says Mastrovito . “ And that ’ s not a good situation .”
So Mastrovito and his team work on transitioning the company and also transitioning the company owner .
“ You have to prepare a business and an owner to be able to successfully transition both of them away from each other ,” he says .
Protecting Employees
As for Bob Jacquart , his retirement will be coming sooner rather than later . He ’ s very comfortable with that and comfortable with the transition plan .
The leadership team is in place . The financials are solid . The plan is ready to activate . Now , all they have to do is communicate with Stormy Kromer ’ s nearly 100 employees . Bob says that the basis of any effective transition plan is to have clear and consistent communication , which does have an impact on employee retention .
... Don ’ t be afraid of telling [ a ] consultant your dirty laundry because , if they do it for a living , they ’ ve seen every jealous cousin or dysfunctional son , or whatever .
— Bob Jacquart , CEO of Stormy Kromer , with daughter and Stormy Kromer President Gina Thorsen
“ There ’ s a lady on the floor who has been here as long as I have . I ’ m not worried about her , she ’ ll probably go within a few years of me going ,” says Bob . “ But how would you like to be a 30-year-old and right now thinking you have a career , but the CEO is 68 and they don ’ t talk about the business surviving after he goes . How long is that person going to be here ?” Bob summarized : “ Gina and her team have worked really hard at the culture here in order to retain employees , and the labor pool everywhere is so short that we ’ re arm wrestling everybody for talent . I ’ m positive that the younger people have to feel really comfortable knowing [ there is a planned transition ]. I have to really think that gives them confidence that this place will go on forever .” 6
Have a manufacturing story to tell ? E-mail communications @ mimfg . org .
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Five Key Steps to a Successful Transition See page 18 for tips for creating a sustained competitive advantage .
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