Own a Business? Important Succession Questions to Consider in 2018

It’s crucial to have a plan in place for the future of the business you’ve devoted your life to building

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Own a Business? Important Succession Questions to Consider in 2018

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Transitioning the ownership of a family business can be a daunting prospect. The decision is often influenced by complex family ownership dynamics, retirement plans and available savings, and a desire to leave a lasting legacy for longtime employees and customers. 

Some business owners choose to simply avoid the subject, but in doing so, they may ultimately harm the health of their company by being forced to make untimely decisions based on factors such as poor health or other unplanned circumstances. They may also be missing out on the most attractive M&A environment ever experienced in the liquid waste industry. 

In late 2017, Tom McLaughlin, former owner of Metro-Rooter in Jacksonville, Florida, decided to find a new owner for his business. “I had been running and growing my business for well over 30 years, and I decided the time was finally right to pass on the torch to a new owner,” says McLaughlin.

There are several critical questions business owners must ask themselves when considering whether and when to transition their business.

Succession: Do you have a clear succession plan in place, and do you have confidence that the next generation has the skills and capabilities to run the business in your eventual absence?

Resources: Have you invested sufficient capital and equipment to allow the company to compete against the growing universe of large and well-funded competitors?

Timing: What are your plans for retirement, and in the absence of selling your company, do you have sufficient outside savings in place to support you?

If the answer to any of these questions is no, business owners should carefully consider their alternatives, or risk being left behind in an increasingly competitive industry. 

Over the last two years, there has been an increase in consolidation throughout the liquid waste industry. This "roll-up" trend is a well-known phenomenon dating back to at least the early 1970s, when Waste Management led a successful consolidation of the solid waste industry.

One of the leading East Coast consolidators in the liquid waste industry is Massachusetts-based Wind River Environmental, which has acquired over 70 companies since inception. Their operations now range from Maine to Florida, with over 500 employees and seven processing facilities. 

As Dave Kline, former owner of Kline’s Services in Pennsylvania, says, “Business owners in today’s M&A environment have some attractive exit options that simply weren’t available in years past.” 

Similarly, Jim Lanier, former owner of Stanley Environmental Solutions/Earth Farms in North Carolina, says, “As I considered my options for transitioning the business, I began to realize the many benefits of teaming up with a larger organization.”

It can be emotional for many owners to contemplate exiting their company, especially after investing many years of proverbial blood, sweat and tears. According to Robert Dimmick, former owner of Vermont-based Dimmick Wastewater Services, “I wanted to pursue other interests, but I also wanted to give my employees more opportunities through a large company than I could offer through my own small business.”

As owners develop their plans and growth strategies for 2018, it’s important for them to proactively think about long-term succession plans for their business. Otherwise, they may not fully realize the best outcome and value for the company they have worked so many years to create.

If you’re interested in learning more about your long-term alternatives, please feel free to contact Greg Creamer or Jack Bailey of Wind River Environmental at gcreamer@wrenvironmental.com or jbailey@wrenvironmental.com


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