The MHEDA Journal - Third Quarter, 2015 - (Page 94)

HuMAN SUCCESSION RESOuRCES Succession Planning twists and turns BY JIM WILSON, PRINCIPAL CONSULTANT, THE MCDONALD GROUP, INC. T he subject of succession planning has bubbled up to the top of many people's list because of the emergence of a large group of baby boomers, and those five to ten years behind whose thought and planning have turned toward retirement. A relatively robust economy may help the multiples of EBITDA for which some business owners sell their dealerships. And, a stronger economy will drive a perceived sense of urgency to sell. However economic cycles are just that. And, no matter when you get ready to transition your business on the spectrum, if you haven't considered some of the things mentioned in this article your business will be undervalued. Detailed here are the mistakes to avoid and positive steps you should take to preserve and optimize the value of your business. Over my 42-year career with an OEM primarily interfacing with several hundred equipment dealer principals, their families, and key employees in North and South America, Europe, and the Middle East, the topic of Succession Planning remained implicit in our relationships. The subject remains yet today difficult and emotional for both OEMs and dealers to think clearly about and discuss openly five years out and beyond regarding the steps 94 MHEDA | that need to be taken to prepare for the inevitable event. Both OEMs and dealers are equally concerned with Succession Planning. This article will focus on dealer succession planning, particularly family owned over which the principal has the most direct control and influence. However, some aspects of what's discussed here still apply to companies that are accountable to non-family investors and/or holding companies. If you are looking for looking for a numerical range of multiples that material handling dealers are selling for these days, this article won't meet your needs. If you want information on what drives the multiples, other than the business cycle, then please read on. At a high level, what are some of the most important goals of "successful" Succession Planning? From my observations and personal involvement, I think they include assuring survival of the business, avoiding surprises, making wise choices, continuing to retain and satisfy customers, rewarding ownership, honoring employees, preserving relationships with key suppliers, and maintaining integrity in the process. This sounds like a lot of work and it is! I am often asked if it's harder for a large dealer or a smaller dealer to work through Succession Planning. There's no correct answer but I think the smaller ones encounter more surprises. Added to that is the emotional factor due to more involvement and dependency of family members on the business along with the available resources to undertake succession planning while still remaining heavily involved in day to day operations and oversight. The bigger ones are more complex because of scale...the size of the capital investment, tax ramifications, and perhaps the financial eligibility and restraints of potential suitors and successors. Let's begin with a checklist of mistakes that I've seen some independent dealers make over the years, and not just in my industry, and then progress to the more positive things that others do well. Many of these you have seen yourself but what have you done to avoid them? As you scroll through the list, consider grading yourself. Simply use three categories: Doing Ok, Could

Table of Contents for the Digital Edition of The MHEDA Journal - Third Quarter, 2015

President’s Perspective
From the Desk of Liz Richards
Editor’s Note
Ask Your Board
In Memory
MHEDA University Calendar
MHEDA Member Profile
@ Work
Industry Pulse
Happy Anniversary!
Best of the Best
Celebrating Material Handling Rock Stars
An Interactive Experience
The Trend Toward Automation
Automation and Labor
How to Talk to Someone Significantly Younger or Les Experienced Than You
Integrating Your Online Presence into a Mobile Market
The Other Competitive Advantage
Hack-Proof Your Company’s Social Media
MHEDA Convention Recap
Turning Sales into Profit
Ten Reasons Why You Can’t Fill Jobs
Sucesion Planning
New Members
Spotlight on Association News
MHEDA Milestones
Index to Advertisers by Product Category
The Last Word

The MHEDA Journal - Third Quarter, 2015