b'THE OFFICIAL NFBA MAGAZINEcontinued from page: 9planned. Organizational objectives. What do you want to see Additionally, owners may have to put off retirement forthe next generation of ownership and management do a year or two in order to make sure the succession goeswith the business?smoothly. But with something as important as ownership How long do you expect this entire transfer process transfer, rushing things through really isn\'t an option.to take? As pointed out earlier, it\'s common for It pays to have a little patienceand a lot of planning.construction business ownership transfers to take Define Overall Objectives and Parameters 8-12 years.The first step in planning ownership transfer isPersonal goals. Some owners say they don\'t want to identifying what you, the owner, want to get out of it.leave until a certain project or initiative is completed, How much money would I like to make? How long dofor example.BUSINESS MANAGEMENTI want to stick around until the new owner completelyKey employee retention. Owners must realize that they takes over? What about the business do I want to remaindon\'t have to give every current employee a piece of the same after I leave? ownership. But owners do have to find ways to encourage "To some owners, it is very important that the businessthe most valuable employees to stick around.maintain the same name," Clancy says. "Some ownersOther considerations. "As you, the owner, are putting want certain employees to be retained in certainyour list together of what is important to you, there are roles. These are the types of things owners need to bemany other things to think through and have an answer thoughtful about as they begin the continuity planningfor," Clancy says. For example:process."Estate and life insuranceAt the same time, an owner must talk with the future Voting control and powerowner(s) about what their objectives are. "There has to Rick profile and indemnificationbe some alignment here," Clancy cautions.First of all, corporate objectives must be defined. This Buy/sell agreementsincludes things like growth and profitability, as well as Treatment of children, family and key employeesthe potential obstacles to achieving those goals. Things for Future Owners to Think AboutSecondly, it\'s important to separate ownership transferThe future owners of the company should be thinking from succession management. Again, these are twoabout many of the same things outlined above. separate components of an overall construction businessAdditionally, future owners need to think about the level transfer. That said, the two often intersect. and duration of the previous owner\'s compensation.For example, a long-tenured superintendent may alsoFuture owners also need to think about their personal be part of a company\'s ownership group. However,financial situations. Future construction business that superintendent is functioning as a "manager" 90owners are often at an age (30s or 40s) when they don\'t percent of the time, and should be compensated andhave a lot of extra cash lying around. "They are often still incentivized based on that managerial role. Anotherin that head-above-water phase," Clancy says. "That\'s example is if you have two 50 percent owners, one ofwhy future owners really need to think through their whom oversees business development while the otherpersonal financial situations and objectives."oversees operations. Even though the two are equalAvoid shotgun partnerships. When two people are partners, their salaries should be based on industryforced to be business partners, it rarely ends well. Even norms for those positions. Then the ownership piece iswhen it appears to be a good fit on paper, things can handled separately. go wrong.Things for Current Owners to Think About "I had a client whose next generation management came Owners must also contemplate their own personal goalsinto play, and one of the new owners didn\'t have that fire when planning a business exit. There is a lot to considerin the belly to evolve outside of his current role to help during the continuity planning process. grow the business," Clancy says. "It all looked good on Personal role. How do you plan to phase out of yourpaper, and he did turn out to be a really good project role as owner? Do you plan on sticking around as amanager. But he just didn\'t have what it took to be an consultant or board member, or are you headed straightowner. The client had to have the difficult conversation for the golf course or fishing boat? with this person and buy him back out. Thankfully, he didn\'t get upset and quit. In fact, he agreed that 10 / FRAME BUILDER - VOL4 6'