The Business of Family - Episodes Tagged with “Selling”

Sean Lang & Jeff Watters - Appointing a Non-Family CEO & Selling a 5th Generation Business

Mike Boyd — Sun, 19 Sep 2021 15:00:00 +1000

The Lang family recruited Jeff Watters as the first outside CEO to lead Ainsworth Pet Nutrition in it's 5 generations. Sean Lang and Jeff Watters worked together, partnering with a private equity firm to scale the $100m per year business into a $2 billion dollar exit over the space of a decade.

This story covers not only leadership succession within a family business but also ownership succession and how the family have stayed together and united around a family office in the absence of an operating company.

Standout Quotes:

"What's gotten us here, isn't going to necessarily get us there" - [Sean]
"As a family, we realized that we would have to make a pretty major change in the journey... And we made the choice to start that journey from family-owned and family-run, to family-owned and professionally-run" - [Sean]
"I think in any family business, there's a certain level of distraction or disruption that comes from the family, and if you can move that into the family council and outside of the board room, it seems to be better for everybody" - [Jeff]
"The family office is being driven by a stewardship theme; Leave it better than you found it" - [Sean]

Key Takeaways:

Sean Lang and the Lang family represent a 5th generation business family who owned Ainsworth Pet Nutrition, while Jeff Watters is the first outside professional CEO recruited by the family to lead the business till it was finally sold.
The business started small, with deliveries made to "mom and pop" stores, expanded over the years, and all interested family members worked in the factory. After school, Sean started as a sales manager and worked his way up to be president.
The family realized that there was a need to make a major change to move with the competition and this would require great talent, moving from family-owned and family-run, to family-owned and professionally-run
Although Jeff was in a place where he wanted more in his life personally and professionally, his relationship with Sean was initially not a professional one. Following further interaction, Jeff realized the family was committed to the business, and they were authentic and intentional about their growth.
The average tenure of a Public Company CEO is about 4 years, and a Family Business CEO is about 6years, even if you think you're going to be there longer than that, you have to plan according to the statistics.
The introduction of professional leadership after 5 generations took some time, however, this had been tried previously and even though it failed, the family had started to get used to the idea. The goal had become to keep the family culture but adopt the benefit of big company thinking and growth capabilities.
The notion of an organic, natural but very transparent onboarding process is extremely helpful for professionals outside looking to join a family business.
Jeff also encourages professionals considering entry into a family business. You just have to bet on yourself to a certain extent. Once you're satisfied that the other party has high integrity and will deliver on their promises, have the conviction that you're going to deliver on yours, and if it doesn't work out, it doesn't work out. There will be other opportunities.
While Jeff's transition into the business had its hiccups, there was a lot of intentional effort from all sides to communicate effectively and create ways to tackle arising issues. This was made easier by the family culture of transitioning where the older generation completely let go of the business which allowed Sean to give Jeff the space needed.
Working with a Private Equity Company was pivotal in driving the rapid growth of the company moving from a 200 million-dollar company to a 2 billion-dollar company in 4 years.
Jeff describes that the main factor that drove growth while working with the PE Company, was a deep cultural alignment
Between the family and the company. It was all about a long strategic view of the business.
The family council was started by Sean's father, and one of the policies laid down was that incoming family members needed to work somewhere else for 2 years or until their first promotion whichever came later, before joining the business.
In the absence of an operating company, Jeff wanted to still have a family enterprise that could act as glue for the family, and help be a driver for education for the rising generation. This would also foster the creation of mechanisms to share the family history and culture with coming generations.
It's not always easy to leave it better than you found it, given the mathematical fact that families almost grow faster than businesses and assets, that means each family member needs to be self-sustaining and look at any help from the family later in life as icing on the cake, not the cake itself.
Sean shares he now has more time for family and personal relaxation, while also finding businesses to invest in. Jeff also tries to have fun, works with his wife on philanthropic projects, and serves on a number of boards.
Jeff's letter to his kids: Jeff tells them to be bold in the pursuit of what they love, hopefully, it will be something that allows them to leave this place a better place. He encourages them to take a leap of faith, the financial fortune is an opportunity for them to invest in their future in a way that can be fulfilling for them and differentiating for their community.
Sean's letter to his kids: The family business cocktail of money, love, and power is trouble. It can rip families apart easily and needs to be proactively managed within the family with the help of professionals.

Episode Timeline:

[00:52] Introducing today's guests, Sean Lang and Jeff Watters.
[02:30] Sean shares the history of the family business.
[08:00] What was the reason for bringing in outside leadership?
[10:00] How Jeff got involved with the business.
[15:18] Were there any surprises while bringing in the idea of getting professional leadership after 5 generations?
[20:21] Jeff describes his transition into the role of CEO.
[29:30] Discussing the growth of the business, involvement of a Private Equity, and the decision to exit rather than transition to a 6th generation.
[42:02] When did the Family Council begin?
[52:25] What was the transition like after the final decision to sell the company?
[01:00:22] Before the company was sold, there were plans to continue the Family Council?
[01:03:51] What Next?
[01:06:00] In a letter to your children, what is one lesson or idea you don't think many parents would mention but you consider important to understand?

For more episodes go to
BusinessOfFamily.net

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Special Guests: Jeff Watters and Sean Lang.

Denise Logan - Work, Money & Meaning: How to Let Go When the Time Comes

Mike Boyd — Mon, 29 Mar 2021 19:00:00 +1000

An award-winning professional speaker and author of The Seller’s Journey: A Business Fable about Navigating the Emotional Obstacles to Selling Your Business, Denise Logan has addressed audiences on three continents about the psychology of business owners and how to make it easier when the time comes to let go. Known as The Seller Whisperer, she draws upon a twenty year body of work focused on the intersection of work, money, and meaning and how it is reflected in the legacies of today’s business leaders.

She has rightly observed that while work is where we spend the majority of our time, much of it is spent wishing we were somewhere else, doing something else. Divorcing meaning from our work too often leaves us blindly trudging through a mediocre life using money as the miserly arbiter of success in matters of soul and meaning. It leads to an endless chase for more, hoping to outsmart death and desperately prove that our life somehow mattered. Even worse, when work is how we define ourselves and we are faced with job loss or impending retirement, it can seem terrifying.

What happens when your old answer to the question “What Do You Do?” no longer fits? If you thought you are what you do, and suddenly you don’t do it anymore, do you not exist?

Standout Quotes:

"Every family's dynamic is slightly different and always the same" - [Denise]
"So as fear starts to escalate, our thinking is disrupted" - [Denise]
"The best transitions happen 5 years before someone is ready" - [Denise]
"The reality is that every owner will exit their business, voluntarily or involuntarily... so you will either transition to someone or you will leave your business with it being unprepared" - [Denise]
"if we look at mortality issues, often the more mortality resistance that someone has , the higher the likelihood is that they will also be avoiding succession planning"
One of the questions I start early on with an owner is ''what does work provide for you, beyond the money?... where will you get those needs met outside the business?" - [Denise]
"Succession happens at all different ages" - [Denise]
"Are we simply creating roles in the business so family members have work to do, as opposed to are they the right people in the business?" - [Denise]
"Change is hard at first, messy in the middle and gorgeous at the end" - [Mike]
"Transparency always works, it is always better" - [Denise]
"The arc of the journey for an owner is the same, whether we're talking about a $50000 hair salon or 500 million-dollar company, the arc of transition that's happening for someone is the same"
"Transition will happen no matter what, so the question is 'what kind of transition do you want to have as a business owner?'"
"Success is often determined by how prepared you are rather than just letting it be" - [Mike]
"Our legacy comes from our daily actions, it is not just the amount of money that we leave behind or the money that we have accumulated" - [Denise]
"We can often get completely spun up on what our number is, the number is not the number in the bank account, the number is the number of memories that we have left behind because that is truly how we will be remembered" - [Denise]

Key Takeaways:

Denise started as a mental health professional and then moved into practicing Law where she started her firm but sold because she lost interest in the business. This prompted her to start a road trip till she was invited to help build a friend's business before the sale, an experience that kick-started her work of helping owners transition during the sale of their businesses. It also inspired her book, "The Seller's Journey".
Using the analogy of a fist, Denise likens the fear center in the brain, 'the Amygdala' to the thumb of the hand, pointing out that while the other fingers could restrict the thumb's movements the same way the frontal cortex can restrict the Amygdala, excessive pressure from the thumb or the Amygdala, in this case, can break free of the restraint, leaving the fear to roam free. This explains the chaotic nature exhibited by people, typical of family dynamics.
Another description using the hand involves the 5 ways through which fear shows up, the 5 fingers are used to represent them; Fight Flight Freeze Fawn, and Submit. Individually, there are often 2 or 3 of them that function more as natural go-to responses when facing fear, anger, or stress.
The anchor, Wave, and Island styles of attachment: An Anchor attachment is someone who can tolerate too close or too far. An Island attachment is the type of person who pulls away or isolates themselves when things get rough. A wave attachment describes a person who reacts to disruption by continually checking on others.
It is necessary to identify needs that are met by the business beyond the money because there is concern about how these needs will be met outside the business, and this could often form the basis for the continuous attachment to the business.
Addressing the handling of messy parts of the conversation, Denise emphasizes the importance of honesty and transparency in allaying the fears that may misguide people's actions in the family.
The 'O-MY' syndrome (One More Year) occurs where a seller repeatedly creates reasons to delay their exit from the business whenever they get closer to the agreed time of sale. This is a signal that something else is going on, a different existential crisis and there are needs to be met.
The moment that you cease to exist is when the last person who has a story to tell about you passes.
Money matters, but it's not the only thing that matters.
There will always be a story that is told about you, the question is "is it the story that you would like to have told about you?"
From Denise to her kids: The way you will know that you were loved was by how you were held and how you were cared for, not by what I left you.

Episode Timeline:

[00:49] Meet today's guest, "Denise Logan" a.k.a 'the Seller Whisperer'.
[01:45] An overview of the journey to becoming "the Seller Whisperer".
[08:52] Denise's 'fist' analogy in describing the role of fear in the brain.
[11:30] The 5 Appearances of Fear.
[14:10] The anchor, Wave, and Island styles of attachment.
[18:10] Do families typically find you when a transition is already underway or as they're contemplating a transition or an exit?
[33:23] How do you handle the messy aspects of the discussion?
[45:30] How often do sellers get caught up on a particular figure that they will only sell at?
[50:39] Discussing the success of transitions generally.
[01:00:56] A letter from Denise

For more episodes go to
BusinessOfFamily.net

Follow Mike on Twitter @MikeBoyd

If you feel it's appropriate, I'd so appreciate you taking 30 seconds to Leave a Review on iTunes, I receive a notification of each review. Thank you!

Special Guest: Denise Logan.