It’s often said umpires or referees have done an excellent job officiating a game if no one notices them during the game or remembers them after. If, on the other hand, they perform like baseball’s C.B. Bucknor and blow calls, forget the ball-strike count and toss managers from the game when they ask for explanations, they are hardly invisible.
The same goes for generational transitions within family-owned companies. When they go right, we never hear about them. But when they go wrong, whoa, do we hear about them. Sometimes it ends up in court. Sometimes the company is sold to outside interests. However they end, Thanksgiving is never the same for the extended family.
Here in London, the first example many people think of is Cuddy International, which was sold to Cargill Ltd. in 2001 after a decade of jockeying by members of the family to run, buy or sue the company patriarch Mac Cuddy had built. The battle was the C.B. Bucknor of family squabbles. But it was hardly alone. Family succession planning can take many forms, including no planning at all. Nothing happens until the person running the business gets sick or dies. Panic ensues and the business tanks.
This month’s Business London magazine cover story is about Moffatt and Powell, the Southwestern Ontario lumberyard and building centre. It is a prime example of family succession done well.
Four years ago, Nancy Powell-Quinn and her husband D’Arcy Quinn bought the business from her father, Dave Powell, and his business partner, Keith Moffatt. Dave continues to play an informal role with the company, but it is clearly being run by the next generation. Since taking over, the thirtysomething couple has modernized and expanded, fighting for market share in a segment dominated in North America by Home Depot and Lowe’s. They forged a buying alliance with Rona and are in the process of broadening the range of products and services offered at their six locations.
But it was never their goal to do any of that. In fact, they were happily living in Winnipeg, both with thriving careers, when her father – visiting for Christmas in 2006 – broached the idea of their coming back to London and getting involved with the company.
It seems many a successful in-family transition includes new owners who have spent some time out in the workforce, learning about the world, rather than occupying a corner office in the family business and waiting impatiently to take over.
Another key to success is for the next generation to start somewhere other than the top. When Nancy and D’Arcy moved to London and got involved with the business, they started at mid-level, reporting not to her father but to a general manager.
“That was key, that they reported to someone other than me,” Dave told me when I was writing the story.
Family businesses can take all the right steps and still fail, of course. Moffatt and Powell is in a tough industry, dependent on housing starts that ebb and flow with the performance of the economy. As the business battles behemoths like Home Depot, it is not encumbered by family or management strife, however. And that’s a key element to get right, if a company is going to survive and be passed from one generation to another in perpetuity.