Buying out the Boss: What our readers thinkCanadian Contractor
We revisit responses to a previous Contractor Dilemma Contest for insights
It was one of the most responded-to dilemmas we’ve ever had! The Harvey brothers, Al and Doug, were frustrated by their older employer who seemed to have lost his mojo. Dick Zimmerman wasn’t quoting out new work as much, wasn’t showing up at job sites. The Harvey’s felt that if they didn’t either start their own contracting business or buy out Dick, they might suddenly be left high and dry and without any work at all. (read the full scenario)
There could be only one winner of the contest. However, it is worth reading some of the comments and the sage advice offered, much of it offered by current “bosses”. Here is a sampling.
A.J. writes about the importance of being fair…..
Just because a relationship is having a rough patch is no reason to abandon it without careful thought. Abandoning the relationship at this stage without trying to fix it would betray that trust. The right thing to do in this case is to discuss their current reservations and concerns, rather than blindsiding their boss who may or may not know that there is an issue. Since they were comfortable and happy with the situation for years, they need to discuss what’s changed with their boss, and try and come up with a resolution. I’m [also] concerned about the statement that indicates he is getting too old. Advancing age is no reason to abandon someone, especially when he does not participate in the labor aspects of the job. He has helped their retirement by contributing to their RRSPs. By not talking to Dick they would be
undercutting his retirement security. If they are concerned about his age, they should discuss a plan whereby they gradually purchase his stake in the business, or buy it outright.
J.S. feels Dick’s future involvement could be helpful…
If Doug and Al were to leave and start up their own company, Dick could feel hard done by. He treated them fairly over the years only to have them drop him when perhaps he needed them the most. Lots of issues could be at play for Dick: health , family, financial. My suggestion is for Doug and Al to make Dick an offer to buy him out but this offer should include a gradual way for Dick to wind down his involvement with the company. Dick is still providing value to the company in terms of experience, contacts, and general mentorship. With the right approach it would become a win-win for all involved.
R & C feel buying out Dick makes sense, with proper caution…
Approach Dick with an offer to purchase his company, but after doing their due diligence to make sure Dick’s company is currently viability. Dick should have no problem in providing any required information if he has nothing to hide. Dick should also see this possibility as an excellent exit strategy towards retirement.
E.B feels respect is in order….
If they [Harvey’s and Zimmerman] have been basically partners and friends this long, Dick deserves an honest conversation with the two brothers. As a business owner myself, I would hope my technicians would speak with me if something was ‘off’. In the event I could fix it or change something, I would hope they would give me the chance to do so. Dick may decide it is time to sell out too; that might be an opportunity to think about that as well.
MDJ feels the fair treatment of the past deserves courtesy today….
Dick has really shown himself to be a model employer in that he has nurtured the Harvey’s along: trained them, provided them with opportunity, given them authority in the company, and been more than fair with remuneration with trucks and RRSP-matching. As such, I’m confident he’s had to accommodate the brothers at more than one time and I would hope that they would extend their boss the same courtesy now. So I recommend they start by having a good discussion on a personal note and ask if there are any problems and offer their support and assistance. An offer to buy the business might give Dick the financial help he needs and for Al and Doug the step up. Al and Doug have made contacts, are familiar with all the team of trades; it would be better off than starting on their own. I know! I’ve started from scratch!
J.P feels a trial run as owners might help everyone decide…
It’s easy to forget that bosses are people with families too. Personal issues can affect us all and, in this case, Dick is likely too caught up in his problems at home to realize the impact it has on the business. After some time to deal with issues at home Dick will (hopefully) be back to his normal self and the brothers can continue work as usual. Or, after some time to reflect and catch his breath, Dick may
be open to selling the business to the brothers and staying on as an employee until he’s ready to retire. A few months of doing the boss’s job would let the brothers find out if they are truly ready to run a business themselves.
C.F. feels the Harvey’s need to plan their thoughts carefully…
Doug and Al need to sit down as a team first and prepare a business plan. They need to know the
options, the financing and legalities required, and to be on the same page — then and only then,
should they talk to Dick about what has been happening, and offer to buy him out. Acknowledge
that he has brought them this far in their careers and training. Promote the idea of staying true to the customer base and quality that he has built. Be open for discussion and allow time for the idea of selling to sink in. Think about the possibility of Dick remaining in a mentor role.
Don’t forget! We have a new Contractor Dilemma Contest now running!
Be sure to enter your proposals before the March 1 deadline!
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