A Case Study In Succession Planning

Overview:

The company was founded in the 1940s becoming one of the premiere mold-making facilities in the United States.  Eventually, they offered complete injection molding and product assembly along with other manufacturing support processes to their customer base which included the furniture industry. The company consists of two manufacturing locations within the United States and has approximately $15M in revenue.

The Situation:

  • Ownership had established a comprehensive estate plan but had not developed a succession plan.
  • The owner passed away leaving his beneficiaries without a clear path forward regarding the business interests.
  • Estate trustees were looking for a third-party recommendation on how best to maximize the enterprise value of the estate.

The Solution:

  • DWH performed a thorough assessment of the company’s leadership, financial and management information, operations, and marketing and sales to draw conclusions regarding the company’s current situation and future prospects.
  • DWH provided numerous recommendations which included a risk/benefit analysis.
  • DWH determined the best path forward was an expedited sale or a winddown and liquidation of the company.
  • DWH was hired to implement its recommendations which included facilitating an expedited sale of the company to a strategic buyer within 90 days of engagement to maximize value.

The Outcome:

  • The transaction was successfully completed within the desired timeframe.
  • All creditors were paid and the proceeds to the estate were double what would have been achieved through a liquidation.

 

Succession Planning: Preserving Company Legacy

Business colleagues discussing work

Determining when and how to transition leadership or ownership to family or employees is vital to preserving a company’s value, legacy, and continuing success.

Yet, according to a 2021 survey, fewer than 34% of family-owned businesses have a formal succession plan that has been communicated to stakeholders. Failure to have a plan in place not only puts the family business and family relationships at risk but can also have an impact on employees and the community.

When it comes to developing a strong succession plan, it’s best not to go it alone – it is a team sport involving legal, financial, and business advisors.

By being proactive, you can ensure smooth transitions, optimize strategic development options, and maximize value so that the business thrives for generations. For instance, bringing in a third party to conduct an assessment can help to uncover current challenges and blind spots, not unlike how your trusted mechanic performs a multi-point inspection on your car. This drives an iterative discussion on observed challenges, risks, and opportunities, which are then contrasted with best practices.

Additionally, you’ll want to work with key members of your team to align expectations for the company’s future – that could range from transforming the business for the next generation to specifying a transition plan for leadership positions, to the development of individuals or family members. Whatever the scenario, the goal is to create alignment in vision and strategy.

If your business doesn’t have a plan in place, we can help, as our business advisors have helped many clients develop their succession plans. We can facilitate a planning process that is both strategic and integrates succession in such a way that considers the ‘why’, ‘how’, and ‘what’ of your business.

Our planning process includes action points that address near-term gaps and achieve mid-to-long-term objectives – all while reducing risks. We’ll also provide ongoing support with resources and experience to guide process improvements, capability development, and implementation of the plan.

To learn more about our strategic succession planning and transformative processes, click here.

 

If you found this topic interesting, our strategic partner, JACO Advisory Group published content you may find relevant as well: Family Business Planning – Preparing the Next Generation to Lead and Who Should be Next in Line to Lead the Family Business?

 

This post was co-written by:
Marcel van der Elst, DWH Senior Director, and Jordan Gunn, Collaborative Designer

5 Qualities to Look for When Choosing a Financial Advisor

Over the past 18 months, many businesses have experienced financial stress.  This may be due to COVID-related slow-downs or shut-downs, supply chain disruptions, or even from tremendous growth.  If you have found yourself in this position, you may have been urged to or required to get some help and may have been provided a list of names to call.  But how will you know who to choose? By cost? By personality? What qualities do you look for? It can be difficult to know what you need if you have never been in this situation before and the stakes are high.

 

The 5 Qualities


Core Values

A good financial advisor devises strategies to maximize the value of a company and proactively communicates a clear strategy and its benefits to each stakeholder. This will minimize unnecessary conflicts, which erode value through the consumption of time and money that could otherwise be allocated to value-creating activities. Ask potential advisors how they work with other stakeholders such as vendors, customers, employees, and lenders/investors.  Try to determine the advisor’s experience and likely credibility with each of these stakeholders.  See if their approach aligns with your values.

Experience
Navigating financial challenges involves more than financial models and analysis. A financial advisory firm should possess a breadth of business competencies and experience successfully guiding the business through the specific challenges you are experiencing.  Ask potential advisors about their experience with situations such as your own.  Ask for references.  Also, a financial advisor who has a team with real-world experience allows them to empathize with your challenges as they assist in developing and executing the best path forward.  So, make sure you ask about the experience of the people who will work on your project.

Capacity
Speaking of team, it is important to make sure your advisor has the capacity to support your business in the time frame you need them to. Make sure you clearly articulate what your expectations are and ask them to provide you a scope of work and timeline in writing.  Ask the potential advisor how they would support you if the timeline needed to be accelerated or the scope expanded.  Ask them if any additional resources would be brought in that were not part of the advisory firm’s normal staff.

Ability to Listen and Understand
Your financial advisor’s ability to listen and understand rather than talk over you with a lot of material is important. Their ego should be left at the door. They should be willing to listen to the issues you are facing and then develop a comprehensive plan to address these issues.  Does the financial advisor ask probing questions and listen to your answers?  Does the advisor speak in a language that is easy to understand and relate to?

Seeing the Bigger Picture
You need a financial advisor who can understand and frame the issues within your broader operations and mission. What other issues are there? What sub-issues exist? What are the goals? How will issues impact other stakeholders? Are the recommended solutions an approach that is sensitive to all stakeholders? Don’t win the battle – win the war. Make sure your advisor is asking questions that show they are focused on the overall business success and not just solving the immediate issue.

 

Choosing the right financial advisor can be intimidating and overwhelming but remember the five topics described in this article when you meet with potential advisors.  This can help you select an advisor who will best represent your interests in a way that is aligned with your core values.

 

All leaders experience performance challenges at some point over the life of their business. You are not alone. We can help. At DWH, we’re here for you. Feel free to reach out for a conversation on how we can be of assistance as you focus on thriving and not just surviving.

 


This post was written by Heather Gardner
hgardner@dwhcorp.com | LinkedIn

All companies experience change.
Plan for it with us.

 

 

If you found this topic interesting, our strategic partner, JACO Advisory Group published content you may find relevant as well: 4 Qualities to Look For When Selecting a Financial Advisor to Super Charge Your Business Results

Committing to Community

Over the past few weeks, DWH Director Jeremy Cosby completed “Committing to Community: Nonprofit Board Training.” This program was put on by the Association for Corporate Growth of West Michigan (ACGWM) and geared toward helping business professionals identify and evaluate opportunities to serve on nonprofit boards.

During three interactive sessions, participants were exposed to a variety of topics concerning the West Michigan nonprofit landscape, board membership and learned what it takes to serve successfully as a nonprofit board member. Several community members were brought in to share personal stories of successful and unsuccessful board memberships. Participants quickly realized that the first step to being a successful board member is to serve with organizations you are truly passionate about. One of the most common mistakes is to accept an invitation to join a board simply out of excitement for being asked. The third and final session provided attendees the chance to network with several local nonprofit leaders during a reception. It was the ideal way for participants to match up personal passions with community volunteer opportunities, and possibly even board-serving opportunities.

West Michigan is full of dedicated organizations, and even more dedicated people looking to make a difference in the community. This training was an exceptional way to showcase both while generating excitement for the dozens of participants who want to make a positive impact.  A huge thanks to Julie Metsker and the ACGWM for putting on this event, Varnum for hosting the sessions, and to everyone who stopped in to the session to share stories.

DWH Celebrates Growth and Expansion

With our first-ever female CEO at the helm, DWH has a lot to celebrate. After nearly 13 years of advisory and support to local businesses and the community, our firm is proud to introduce a new look to reflect our continued evolution in Grand Rapids, along with the expansion of our Detroit office. This last year alone, we grew staff by 60% and achieved over a 65% increase in revenue.

Launching today is our new identity, complete with logo, tagline and website, that encompasses our company philosophy of focusing on people.

“Our new tagline – For the life of your business – truly captures the relationships we have with our clients,” stated Monica King, CEO. “We get engaged for a variety of reasons and the ‘how’ in what we do really does make a difference, often leading to long-term relationships where we support many needs throughout all stages of business.”

The new logo takes a clean and uncomplicated approach to the DWH brand. The mark is accompanied by three small dots representing an ellipsis. Ellipses are softened shapes, informally gesturing towards the continuation of something – similar to the journey DWH clients take. The circular container acts as a modern take on a business seal, which by definition is “a device or substance that is used to join two things together…” a perfect representation of DWH’s commitment to the businesses we help.