Sell Business and RE or hold out until Son is ready to take over?

[HI Bill]

Quote:

Originally Posted by HoleDigger My Son, who is turning 23 in two weeks has expressed interest in taking over the business since he was early teens. Unfortunately, for multiple reasons, he is simply not ready. I'd estimate at least 2-3 years for that to develop.

Has your son done more than express an interest? Has he been actively involved in learning and running the business? Has he put in the kind of hours you have? If not, he may be waiting to be handed a present and will likely fail, allowing the businesses to do so also. If he hasn’t put forth the effort, sell and enjoy your well-earned retirement. If he has, figure out how you can help your son (one or two restaurants?) and still retire!

[RenoJay]

For what it’s worth, I’m a business broker in my real life. Most buyers are relying on SBA loans to make an acquisition. The banks are “looser” than I’ve ever seen them (I.e. giving loans to almost anyone with 10% down) meaning that businesses are currently selling like hot cakes at high prices with multiple offers. I sincerely doubt this state of affairs will continue indefinitely. If your decision is to sell to a stranger then now is the time. If you want to keep biz in the family then wait as long as it takes til son is ready to handle it.

[Aerides]

It would take an extraordinary 23 year old - or 25 year old for that matter, to successfully take on a restaurant chain like you describe. What is he currently doing - is it remotely related or in business management?

You say he says he's interested, but that he lacks "entrepreneurship, passion and drive" - quite normal. If he was 33 with a good background, then I'd say hand it over. But he's not even close. Even if you wait 2-3 years, there's a very big chance he runs it into the ground in the next 2 years, and/or drags you back in to help save it.

You earned it, you should sell and retire. Let him know you'll be glad to help support his goals, but selling is part of yours.

[Offgrid Organic Farmer]

If it were me; I would hire my son at one location at the bottom. When he screws up bounce him to a second location. on and on. If he learns and if he develops the drive, then he can advance to a slightly higher position. With the agreed goal that he will one day advance to manage one location.

At the same time, try to find a responsible manager who can take the burden from me in the process.

[socca]

My 20 years of experience as a wage slave allows me to fully appreciate how nice it is to be the boss (I joined the family biz at age 44). If you are proposing allowing your son to skip the wage slave stage, he may not appreciate how good he has it (and may be a terrible boss to boot). Family biz succession issues are sufficiently complex that professional advice is probably a good idea. Good luck!

[brett]

Take a hard look at the business failure rate of businesses that pass to children. My guess is that is even higher for the restaurant sector.

Get some professional advice on how to extract the maximimum value for your business, and some tax/legal advice on how to structure the sale and minimize the tax and minimize any exposure that you may have.

This is the time to go with your head, not your heart Get out and enjoy your life while you have the health to do so.

I suspect that deep down you have already made this decision.

[Katsmeow]

Given what you said in your messages, I would sell. I might consider retaining 1 restaurant for the son.

[JDARNELL]

Quote:

Originally Posted by Katsmeow Given what you said in your messages, I would sell. I might consider retaining 1 restaurant for the son.

I agree. You have worked hard with fire in the gut. If son is not there yet why would you trust the resources you have accumulated to him in the current form?

[HoleDigger]

Son didn't skip wage slave stage. In the restaurant business everyone has to start at the bottom..at least at my stores. He worked for $10/Hr for 2 1/2 years and did not complain. Well, he did complain a LOT for about 5-6 months at the beginning but finally got used to hard work. And as I said a few posts back he is now a General Manager. The youngest GM in the company...it shows. But he definitely has potential and probably the most important thing is he wants to be there and do a good job. Sometimes these kids just don't know what it takes. A few more years under his belt and there will be much experience to tell if he has the drive. Some restaurants get lucky because the competition is average and all they have to be is good.

I agree 100% that professional advise is needed...on my list for today to set a few appointments.

[JDARNELL]

I have been thinking more about this the last few hours and here are some thoughts.

You have done a great job building a business and I doubt you were ready when you started to handle the scope of what you have today. I look at my own situation and no way I was either. I think to think your son would be ready to do it is probably not realistic however that doesn't mean you can't get him there.

For example if he starts on a smaller scale and then you add more units to his responsibility. He may thrive under Dad's guidance or decide the amount of responsibility he has is enough. My guess is he will thrive just because of the pride he will have for his family business and to make Dad proud.

OTOH if you can get top dollar now perhaps taking some $$ off the table using some for your own well deserved enjoyment and having a plan to help your son grow his business that he develops might be another option. Family wise I think you will still have the assets just perhaps in some cash vs the business you have created.

What got me thinking about this is the rentals that my wife and I have accumulated and the succession path for our kids. We don't put near the hrs you put into your business. I could just begin to transition them over to the kids to manage, but lets face it no matter how much I train them they will not do it like I do it. And how I do it today is a lot different to how I started because I have learned over the years. In my case my kids need to experience that feeling of pride, frustration, etc. Personally I am not sure I can step back enough to give them their space and afford them the opportunity to grow as I am a type A fixer.

I think when we create something like a successful business, organization, etc we are emotionally attached in some way. I am not nearly attached to a pile of cash that I could invest in a son's business when he has more skills as compared to the physical things I have accumulated.

I definitely want to make sure my kids are established and are able to utilize the resources I decide to leave them one day without always wondering what Dad would have done while they pursue their vision of success. My kids are college age developing their intellectual capital so I am behind you. Money and Business mixed with family can make some squirrely things happen.

Good luck!

JDARNELL

[ExFlyBoy5]

Lots of good advice here, so mine will be short. We have a family friend that owns a large number of McD's in the Atlanta area...has been in the family for years. The founder died a number of years ago and only 1 of his 4 kids were interested in the business. Ultimately, when the founder decided to retire, he sold half the units and kept the rest in the family. The son that took over was younger, but he did grow into it and now owns almost double the units that he started with. Perhaps if your son has more "skin in the game" he will gain those skills that are lacking (or aren't fully developed yet).

In your specific case, perhaps you could figure out how much $$$ you would like to net for you to totally retire and plan accordingly. Basically sell off as many stores as you would need to meet your $ requirements. What is left...that is what the son can run. Of course, you could also continue to get a royalty with what is "gifted" to him...or a profit sharing arrangement of sorts.

Also, the idea of having a really good management team can make it so you can be an absentee owner. You already own/run a number of units and obviously you can't be at all of them at the same time, so they are already "on autopilot" to a certain extent.

[marko]

As noted above, why not hire a good GM to hold Son's hand for a few years?

[bloom2708]

+1 sell. Gift some of the proceeds to dear son.

On the flip side, my in-laws ran a successful small business for years with the intention that their oldest son would take over and run the business. He worked there most of his career. When it came time to retire he told them he didn't want to run the business.

They sold and he went and got a job at a competitor who did the same thing.

He never said at any point along the way he didn't want to take it over when they had discussion.

I would do what is right for you. A bird in the hand is better than 2 over in that bush over there.