b'THE OFFICIAL NFBA MAGAZINEwant to remain the same after I leave? Personal goals. Some owners say they don\'t want to "To some owners, it is very important that the businessleave until a certain project or initiative is completed, maintain the same name," Clancy says. "Some ownersfor example.want certain employees to be retained in certainKey employee retention. Owners must realize that roles. These are the types of things owners need tothey don\'t have to give every current employee a be thoughtful about as they begin the continuitypiece of ownership. But owners do have to find ways planning process." to encourage the most valuable employees to stick At the same time, an owner must talk with the futurearound.owner(s) about what their objectives are. "There hasOther considerations. "As you, the owner, are putting BUSINESS MANAGEMENTto be some alignment here," Clancy cautions. your list together of what is important to you, there First of all, corporate objectives must be defined. Thisare many other things to think through and have an includes things like growth and profitability, as wellanswer for," Clancy says. For example:as the potential obstacles to achieving those goals. Estate and life insuranceSecondly, it\'s important to separate ownership transferVoting control and powerfrom succession management. Again, these are twoRisk profile and indemnificationseparate components of an overall constructionBuy/sell agreementsbusiness transfer. That said, the two often intersect. Treatment of children, family and key employeesFor example, a long-tenured superintendent may alsoThings for Future Owners to Think Aboutbe part of a company\'s ownership group. However, that superintendent is functioning as a "manager" 90Thefutureownersofthecompanyshouldbe percent of the time, and should be compensated andthinking about many of the same things outlined incentivized based on that managerial role. Anotherabove. Additionally, future owners need to think example is if you have two 50 percent owners, one ofabout the level and duration of the previous owner\'s whom oversees business development while the othercompensation.oversees operations. Even though the two are equalFuture owners also need to think about their personal partners, their salaries should be based on industryfinancial situations. Future construction business norms for those positions. Then the ownership pieceowners are often at an age (30s or 40s) when they don\'t is handled separately. have a lot of extra cash lying around. "They are often Things for Current Owners to Think About still in that head-above-water phase," Clancy says. Owners must also contemplate their own personal"That\'s why future owners really need to think through goals when planning a business exit. There is a lottheir personal financial situations and objectives."to consider during the continuity planning process. Avoid shotgun partnerships. When two people are Personal role. How do you plan to phase out of yourforced to be business partners, it rarely ends well. role as owner? Do you plan on sticking around asEven when it appears to be a good fit on paper, things a consultant or board member, or are you headedcan go wrong.straight for the golf course or fishing boat? "I had a client whose next generation management Organizational objectives. What do you want to seecame into play, and one of the new owners didn\'t the next generation of ownership and managementhave that fire in the belly to evolve outside of his do with the business? current role to help grow the business," Clancy says. "It all looked good on paper, and he did turn out to How long do you expect this entire transfer processbe a really good project manager. But he just didn\'t to take? As pointed out earlier, it\'s common forhave what it took to be an owner. The client had to construction business ownership transfers to takehave the difficult conversation with this person and 8-12 years. buy him back out. Thankfully, he didn\'t get upset and quit. In fact, he agreed that he probably wasn\'t 12 / FRAME BUILDER -OCT2020'