How Five Family Business Owners Managed Succession

Here's how they managed the transition between generations — and how those plans affected owners’ timelines for retirement.

By Martha C. White

Most workers strive to keep their personal and professional lives separate. But for people who start or inherit a family business, the opposite is true: The personal is professional. And it gets very personal when it comes to retirement.

Family businesses employ close to 60% of the nation’s workforce, according to calculations by professors at the University of North Carolina at Charlotte and Kennesaw State University, in collaboration with the family-business research and advocacy group Family Enterprise USA. They found there are as many as 32 million family businesses in the country.

In a sense, running a family business is the epitome of entrepreneurial success, with passing on that business to children the apex of that success. But a 2021 survey by the consulting firm PwC found that only about one-third of family-owned businesses have a succession plan. We looked at five of these businesses to see how they managed the transition between generations — and how those plans affected owners’ timelines for retirement.

You Shouldn’t Just Wing It

When Joe Groebner took over the natural-gas equipment distribution company his father started in Minnesota in 1976, the handoff was a casual affair. But when his daughter, Carissa Skorczewski, was working her way toward the CEO title she attained in 2021, she insisted on hiring experts who could guide them through the process.

“When we went into a discussion about business transition, my plan was just to figure it out as we went along,” said Groebner, 63. “That was not a good plan.”

While there are often both emotional and financial imperatives to transferring a family business between generations, shifting ownership of assets and day-to-day operational control is a complex and delicate process.

“When it’s a family business, not only do we have to transition the ownership and the management, but we also have the family component,” said Holly Geerdes, founding attorney of the Estate Law Center. “We have a lot of parents who just assume and wish and pray that their children are going to come into the business, but they don’t have that conversation. They really have to map it out and make a game plan.”

Skorczewski, 36, said that even with the assistance of advisers, the Groebner transition hit some bumps.

“My dad wasn’t looking to leave right away,” Skorczewski said. “Without a timeline, it got a little tricky at some points” to delineate corporate roles, she said. “You always think you have more time than you do.”

It’s common for owners to miscalculate how long a generational transition will take, according to Steve Zimmerman, co-founder of the financial planning firm Mindful Asset Planning, who advised the Groebner family.

Family businesses come in many forms: S corporations, LLCs, partnerships and other corporate structures. Although they are privately held, ownership is typically defined as shares of stock in the company. Owners can give or sell shares in several ways to help a generational handover.

“Consultants usually talk about a 10-year transfer,” Zimmerman said. The project starts by organizing business processes, identifying successors and building a leadership path for the new generation along with an off-ramp for the departing leaders.

Jonathan Flack, U.S. family enterprises leader at PwC, said the timeline was long because succession includes two concurrent tasks. “Transferring ownership and transferring leadership are two different things,” he said.

Groebner said, “I’m really glad we put together a team that kind of walked us through it.”

‘The Biggest Key Is Patience’

Succession planning, family business, retirement
Chad Weaver, President of Weaver Homes, at a model home in Mars, Pa. on March 22, 2023. Weaver, whose family owns the home-building business near Pittsburgh, is two years into a five-year schedule of buying out his parents. (Jared Wickerham/The New York Times)

In 2005, Chad Weaver went to work at the Pittsburgh-area homebuilding business his parents had started three decades earlier, expecting to fully inherit the operation by 2015.

It hasn’t quite worked out like that.

“It was a 10-year plan that turned into a 20-year plan,” Weaver, 49, said. Now, he is two years into a five-year schedule of buying out his parents, and his parents still hold a majority of voting shares. “I’m respectful of the fact that for the second generation, the biggest key is patience.”

This buyout plan is a common method for transferring the assets of a business from parent to child, providing a stream of retirement income for the parents and giving them a gradual off-ramp.

This is appealing to business owners whose adult lives have been more or less defined by their business, succession advisers say. “It’s not really a job; it’s an identity,” said Josh Baron, partner at BanyanGlobal, a business succession consulting firm. “It’s very unlikely you’re going to just walk out the door and start playing golf or pickleball.”

There are also financial ties. Baron said he saw some company founders sink everything they had into their ventures, setting aside little or nothing for retirement.

“The business is usually their most valuable asset,” he said.

John Campbell, a senior vice president at U.S. Bank Private Wealth Management, said owners tended to trust their own business acumen, sometimes at the expense of diversification. “It could lead to concentration of risk if you have all your eggs in the family business,” he said.

This raises the stakes for the next generation to keep the business thriving — but experts say a reluctance to cede control can inhibit growth if their children don’t get the opportunity to practice decision-making or cultivate their own leadership style.

While the younger Weaver has expanded Weaver Homes to 30 employees from four, he said his parents struggled in its early years. “The bulk of their income comes from the projects and the profit,” he said. Even after the buyout is complete, he said, his parents will retain the option of an investment stake.

Weaver’s father, Bill, retains the chair and CEO titles but is no longer involved day to day. The younger Weaver is the president, and his mother, Bonnie, remains vice president and handles homebuyer closings. “She wants to keep working; she wants to stay active,” Weaver said. Besides, he added, “I’m not going to fire my mother.”

Children Have Their Own Ideas

Retirement, family business
Kathy Bauer and her son, Will Bauer, who shares ownership of their family leather goods business, Royce New York, at the company’s newest boutique location in Greenwich, Conn. on March 20, 2023. Becoming an e-commerce-focused company — and absorbing that expense — during the chaotic early days of the pandemic was a hard sell, Mr. Bauer acknowledged. (Dave Sanders/The New York Times)

When COVID shut down in-person retail — through which Royce New York derived the vast majority of its sales — the family-owned leather-goods company had to transform its business model virtually overnight.

“It was an opportunity for a paradigm shift,” Will Bauer said. “How our products were being distributed was pretty archaic.”

Bauer, 31, shares ownership with his mother, Kathy. His father, Harold, started the Royce brand to expand the business his grandfather established in New York after fleeing Nazi-occupied Austria. Poor health forced Harold Bauer, who died this month, to step back from running day-to-day operations a number of years ago.

The pivot wasn’t easy. Becoming an e-commerce-focused company during the chaotic early days of the pandemic was a hard sell, Bauer acknowledged. So was his campaign to redesign Royce’s goods to better reflect millennial sensibilities.

“You almost feel like you’re the high school kid again,” he said. “It’s almost like you’re arguing with your parents.” At times, he added, voices were raised.

“One of the big things with millennials is, they want everything now,” Kathy Bauer, 63, said. “There’s nothing like maturity and life experience.”

Geerdes of the Estate Law Center said she saw this conflict frequently. “The children and the parents working together is a challenge because now your children are adults; they have their own opinions that are not necessarily consistent with the parents’,” she said.

Kathy Bauer said, “I think it took probably many months for us all to have some sort of agreement” about how and how much to spend on digital sales and marketing.

Out of that crucible, though, came not only commercial success but a clearer vision of what Royce New York will look like.

Bauer said she was fully on board. “I have, over the past 18 months, incorporated him into every business decision and every problem,” she said.

Will Bauer said: “The best learning lesson in this business has just been seeing both the strengths and weaknesses of how my parents have managed it. The goal is eventually for me to be a sole owner.” But retiring isn’t exactly in the family DNA, he added: “My grandfather effectively died at this desk.”

Kathy Bauer said she had no plans to retire. “I see myself working to the end, as most entrepreneurs want to do,” she said.

An Inheritance of Racism

Succession planning, family business, retirement
Angelo Perryman, right, the second-generation owner of Perryman Building & Construction Services, and his daughter, Angelina, who will be the next leader, in Philadelphia, Pa. on March 23, 2023. Although Perryman said he expected to hand off some of his current duties over the next few years, he dismissed a traditional retirement, saying he expected to remain involved with clients and as an adviser. (Hannah Yoon/The New York Times)

Perryman Building & Construction Services is one of the best-known names in construction in the Philadelphia area, with a project list that includes some of the most prominent structures in the city, including the Pennsylvania Convention Center and Lincoln Financial Field, home of the Philadelphia Eagles.

Angelo Perryman, the company president, CEO and second-generation owner, said he grew up seeing his father, Jimmie, struggle to expand the small homebuilding operation he started after returning home from the Korean War.

Most builders today, even small ones, take for granted the availability of a line of credit, because materials and some labor have to be paid for in advance. “You have to do the work first, and then you get paid,” Perryman said.

But in Jim Crow-era Alabama, where the firm began, banks wouldn’t extend credit to Jimmie Perryman. “When my dad started the firm in 1954, it was, you build up your own cash cache to self-finance,” his son said. “That obviously impacted how much we grow — and don’t grow.”

The impact on Angelo Perryman and his two brothers was profound, he said: “When I was 8 years old, I was laying bricks.” (Both brothers remain on the company’s advisory board.)

Perryman moved the business to Philadelphia in 1998. He expanded the company significantly, but he said the effects of the discrimination his father suffered linger more than half a century later.

“As it is even now, African American-owned businesses are few,” he said. “African Americans, because they lack access to capital, are impacted deeper” and struggle to grow, he said. “You’re always undersized.”

“You may want to be really conservative but could be forced into a much more risky place,” he added.

Perryman said these experiences have influenced how he prepared his daughter, Angelina, to lead the company as a Black millennial woman in a male-dominated industry.

“Angelina is, to a large degree, running day-to-day now,” he said, adding that she has been working for the company for about 15 years and is vice president. “It’s generally known that she will be the next leader.”

Although Perryman said he expected to hand off some of his duties over the next few years, he dismissed a traditional retirement, saying he expected to remain involved. “I don’t think I would see what you naturally call retirement,” he said, adding that he has a good working relationship with his daughter.

“She respects wisdom,” he said. “It’s not about who’s boss.”

Dividing Things Up Fairly

Succession planning, family business, retirement
Craig Underwood, who runs his family’s jewelry business, Underwood Fine Jewelers, in downtown Fayetteville, Ark. on March 20, 2023. He is finding that dividing his father’s estate, which includes the business, will be tricky. (Karen E. Segrave/The New York Times)

Many owners envision carrying on the family business, but Craig Underwood took the scenic route, getting a graduate degree and working for a competitor before returning in 1987 to the Fayetteville, Arkansas, jewelry store his father, William, opened three decades earlier.

“Seeing things from a nonfamily member’s perspective is incredibly beneficial,” he said.

So when the second of his three sons, Troy, expressed interest in taking over the store, Underwood insisted the young man follow the same path.

“If you come right into the family business, you’re in a bubble,” he said. “You have the same last name, and employees treat and perceive you differently. It’s not a completely unbiased situation.” Troy, now 30, earned a gemology degree and worked for the same rival before moving to Underwoods Fine Jewelers in 2021.

Experts say this is a good idea. “You have to be not only liked but respected,” said Bill Boyajian, the author of a book on family business succession planning and a consultant who works with mom-and-pop jewelry stores.

Underwood said he and his wife, Laura, who works in the business, planned to give Troy shares in it over a period of years.

But giving away a business doesn’t necessarily make the transition easier. Experts in succession say one of the thorniest issues is how to divide an estate, most or all of which may be tied up in the business, among multiple children, not all of whom will end up running it.

Underwood is facing two generations’ worth of this challenge: with his two siblings, as well as his three children.

Life insurance is a frequently used tool in succession planning. Policies can balance out what an owner’s heirs will receive after their death: If one daughter inherits a $5 million business, for instance, her sister might be named the beneficiary of a $5 million life insurance policy that pays out when the parent dies.

But the best-laid plans can still be upended: The founding Underwood had the business assessed, then gave stock to Craig over a period of years and took out life insurance for Craig’s two sisters so all three would receive roughly equivalent inheritances.

That was the idea, anyway. But William Underwood’s robust longevity — at age 90, he no longer runs the store but still visits a few times a week, his son said — could complicate the plan. The policy terminates when he turns 95, so if the elder Underwood lives longer than that, there could be little for Craig Underwood’s two sisters to inherit.

“I’m a little bit soured on insurance for that reason,” Craig Underwood said, adding that the situation has left him at a crossroads in his own estate planning.

While calculating the value of a family business requires sophisticated accounting, quantifying the time and emotional resources invested can be a much bigger challenge, Boyajian said: “Fair isn’t always equal, and equal isn’t always fair.”

c.2023 The New York Times Company. This article originally appeared in The New York Times.

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