b'THE OFFICIAL NFBA MAGAZINEcontinued from page: 31takes an extended period of time to really developgoing to be a winning, opportunistic strategy for someone that the owners, employees, the vendors,the future, says Larry. People need to be working the banks, and others can all trust to move theon their strategy, including their successors.company on after the original or the retiring orLaRosas, Inc., a chain of pizza restaurants located exiting owners leave. in Ohio, Kentucky, Indiana and Tennessee, is an Every entrepreneur will exit with or without aexample of a company with a business owner, plan in place, but Larry shares the 3 main types ofBuddy LaRosa, who was able to be proactive and transitions to second or third generation owners: forward-looking about his companys succession 1.Internal transaction: This could involveplan.BUSINESS MANAGEMENThanding down a business from one generationThe company, a Goering Center member, was to the next, or it could be an internal sale wherefounded in 1954 by Buddy (and partners whom control is transferred within the companyhe eventually bought out).among its leaders. When it came time to thinking about his eventual 2.External transaction: A strategic buyer isexit, Buddy chose a non-family member executive, typically a buyer in the same industry. T.D. Hughes, to continue to grow the company. 3.Private equity groups: PE Firms (also knownAs a LaRosas veteran that was trusted by Buddy, as PEGs) are buyers outside your industry. having T.D. at the helm provided Buddys sons and daughter the opportunity to grow and continue Its never too soon to start planning, even if ato learn from the business.business owner is unsure of what the exit will lookAfter 54 years in business, Buddy was able to like. If owners can acknowledge that they do not know which of those 3 options they are going tosuccessfully complete the leadership transition of choose when they do make the eventual transition,his business to his son, Michael LaRosa, as CEO, they can at least understand what those 3 types ofand to T.D. Hughes as Chairman of the Board. buyers are going to look for, and what theytheIt was a great example of making decisions that ownerneeds to get ready for. If you\'re going towere healthy for the business and kept the business sell to a PE firm, it\'s a whole different set of criteriagrowing and prosperous.and work to be done rather than if it\'s an internalWhen we think about succession, and what sale or transition, for example. somebody started or subsequent generations now Once goals are shared and decisions start to belead, it\'s so critical that they think through these made, a plan of action will need to be developed,issues, says Larry. Doing so will give them the best as Beth also explains. No matter what your exitchance to have their company, their employees, strategy isinternal, strategic buyer or PE firm and what they do in their communities, to all have team members have to know that the strategy isa successful future."People need to be working on their strategy, including their successors.32 / FRAME BUILDER -APR2020'