Case Study

How Internal Succession Planning Doubled the Size of One Company & Preserved the Founder’s Investment and Legacy

When a majority owner in a long-established second-generation specialty construction, project management, engineering & maintenance company was ready to reduce his role while maintaining his investment, he engaged Quest.

Given the owner’s desire to see existing employees assume leadership roles, Quest’s job was to create a third generation of leadership without erasing the majority owner’s legacy. With this in mind, Quest educated the owner on the options available, which included a third party sale or private equity transaction, an ESOP, a management buyout, or key employee buyout in part.

Ultimately, we opted for a solution focused on internal succession. Our customer selected two specific leaders he felt could improve and grow the business and maintained a significant minority stake in the company to preserve his interest while decreasing his overall workload.

As a result of the internal succession choice, in addition to the company nearly doubling in size in a short period of time, our customer was able to achieve all of his goals without compromising the value of his investment and his legacy.

Quest allowed me to take a step back without losing all control.

THE CHALLENGES

  • Lack of proper valuation
  • Founder unaware of options so there was no succession plan in place
  • Challenging family dynamics in second generation ownership of a 70-year company

THE SOLUTIONS

  • Conducted a proper company valuation
  • Educated owner on available succession options
  • Crafted an internal succession plan to support the owner’s goals of decreased responsibility and increased wealth while continuing his investment and legacy in the company

THE RESULTS

  • The company doubled in size in a short period of time
  • Existing, proven employees assumed leadership, creating a seamless transition
  • Owner realized personal and professional goals while preserving his investment in the company