According to consultant Ken Stiefler, few remodeling businesses are sold. The reason: “The owner has developed the success of that business around him or her” instead of developing a strong management team.
Not so for company owner Peter Schrader, who sold his 40-year-old Burnt Hills, N.Y., company to his son, Silas, and his son’s friend Ben Cangeleri in 2011. Schrader planned and researched his exit strategy for 15 years before taking action.
Silas Schrader grew up in the family business but joined the Marine Corps after college. Cangeleri—a college friend of Silas’—worked for a commercial construction company for two years after college as a construction manager trainee. He joined Schrader and Co. in 2004 as a production scheduler. Silas returned to the company in 2009 as a carpenter.
In forming his exit strategy, Peter had been reading e-newsletters by exit planner Ken Stiefler, president of Exits, in Denver. When Peter was ready, he hired Stiefler to help format the sales transaction.
Stiefler points to the management team as an important part not just of exit planning, but of strategic planning as well. A good test for a company, he says, is if the owner can leave for an extended vacation without disrupting day-to-day operations.
Peter Schrader had spent 10 years establishing a management team and was easing himself out of the company’s daily operations. Cangeleri says that Schrader and Co.’s clients, subcontractors, and employees had gotten used to not seeing Peter every day, so the announcement about the company’s sale came as little surprise.
Turning to the Team
“From a process standpoint, it takes about six months to a year to develop a good exit strategy,” Steifler says. “Then it takes five to six years for an owner to implement their plan. That’s where business owners get into trouble—they don’t realize how long it takes.”
Stiefler and Peter Schrader took a year to establish the transition plan, calling in experts—a new CPA and a new attorney more skilled in this type of sale—to help implement it. Cangeleri and Silas appreciated Stiefler’s help in facilitating the transition. “He worked with us on our timeline, tasks, roles, and responsibilities,” Silas says.
After the sale, Cangeleri changed roles from being vice president to become company president; Silas became vice president; each owns 40% of the company, with Peter maintaining 20% ownership until 2015. Peter also continues to work at the company as a paid consultant.
“Most business owners have an exit strategy inside of them—my job is to bring it out,” Stiefler says. “Most of them only have one chance to sell the business. [The process] has its ups and downs and a lot of emotions enter into it. I have to keep bringing them back to objectives.”