May 2020
Hear Chris’s story as he shares how he rescued the family business from bankruptcy during the Great Financial Crisis, revamped the company’s strategic initiatives and led the company to its highest level of profitability in its 80 year history. As Chris looked to the future, securing his family’s legacy and financial security was a top priority. He chose to sell the company to Henry Co., a strategic buyer backed by a Private Equity firm.
In this episode, Chris discusses some of the finer points between a family succession plan and a transaction with an external party. For example, with a family succession, Chris points out the importance of clearly defined leadership roles for the new management team so it’s clear to employees how they need to prioritize their work and responsibilities. One potential solution Chris suggests is to consider moving the former CEO to a more remote office away from the main office.
One of the beauties to family successions, if over multiple generations, is the cumulative lessons learned along the way which can be retained and passed from one generation to the next.
When it comes to an institutional buyer, Chris says cultural differences will shine through. For example, a Private Equity firm has a more formal structure and will look at the acquisition through the lens of risk management. This will cause the due diligence process to be more onerous than with a private non institutional buyer, who is likely looking to be more opportunistic. The process is much more formalized than with a family transfer.
Chris strongly encourages entrepreneurs to consider having a board of Strategic Advisors. These are non-fiduciary members who can push the owner to think about the company in a different manner than they are accustomed to. Additionally, these advisors can help professionalize the company which will enhance the enterprise value of the business and make it more attractive to a potential suitor.
Lastly, he shares his 2 action items for owners:
1. Push to professionalize your business: Specifically, Chris encourages owners to ensure their financial record keeping is accurate and robust. Sloppy accounting and financial records will not stand up to the rigors of due diligence when dealing with a strategic institutional buyer or a Private Equity firm.
2. Value Creation: Set the business up in a way that can create value for anyone not just you.
Chris now spends his time consulting with other businesses and writing for Forbes magazine. If you’d like to connect with Chris Yount, he can be reached via his website at https://www.christopheryount.com/contact.
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Disclosure: Information presented herein is for discussion and illustrative purposes only. The views and opinions expressed by the speakers are as of the date of the recording and are subject to change. These views are not intended as a recommendation to buy or sell any securities, and should not be relied on as financial, tax or legal advice. You should consult with your attorney, finance professional or accountant before implementing any transactions and/or strategies concerning your finances.
