Addressing Family Dynamics in Business Succession - Part Two (#276)

Part two of Amy Morin and Amy Wirtz's podcast is now out: 'Addressing Family Dynamics in Business Succession - Part Two (#276).' Hear the end of their discussion on the importance of addressing family dynamics during business succession planning. 

Tune in weekly to hear more from Mastery Partners and to receive relevant key content on your journey to maximizing your business value!

Podcast Chapters
00:00 — Introduction
01:08 — The Family Readiness Assessment Process
03:05 — Gifting Leadership vs. Transferring Ownership
05:40 — Governance, Family Councils, and Skill-Based Promotion
07:28 — When to Engage a Family Business Advisor
09:46 — The Emotional Toll of Letting Go for the Exiting Generation
13:07 — The Complex Dynamics of the Next Generation
16:58 — Redefining Success: Harvesting Wealth via Third-Party Sales
18:18 — The #1 Tip for Building Business Value
19:45 — Outro

 #maximizebusinessvalue #masterypartners #AmyWirtz #TheFamilyBusinessConsultingGroup

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Learn More about Amy Morin
Amy Morin is an accomplished entrepreneur and Business Growth Coach who brings exceptional value to your network. She has an impressive background as a Certified EOS Implementer®, Outgrow Sales Advisor, and Certified Exit Planning Advisor®. What makes Amy truly remarkable is her real-world success. She co-founded and scaled a company from zero to $40 million in revenue across multiple states before executing a successful exit. Later, she purchased a struggling Montana fly-fishing resort, implemented effective systems and accountability measures, and transformed it into a profitable enterprise that she also successfully exited.

Learn More about Amy Wirtz
Amy Wirtz is a senior consultant with The Family Business Consulting Group passionate about helping families develop and define their purpose. She works closely with families to identify their goals around values, ownership, and financial wealth. To support these goals, Amy helps families establish family offices, family councils, and enterprise governance systems. Amy’s multidisciplinary background supports the unique challenges family businesses face. She holds a bachelor’s degree in secondary education and a law degree, and she practiced law for 27 years, ten of which were focused on collaborative law. She is also a trained mediator and skilled facilitator with deep expertise in conflict resolution, communication, and listening.

In 2024, the Exit Planning Institute named her Exit Planner of the Year in recognition of her outstanding work guiding family firms through successful transitions. Amy also serves on multiple family business advisory boards in Ohio. She is a sought-after speaker for organizations such as YPO, YPO Family Office, the Private Company Governance Conference, and The Exit Planning Institute.

Mastery Partners

Elevating Businesses to Achieve The Business Owner’s Dream Exit 
The unfortunate reality is that for every business that comes on the market (for whatever reason), only 17% of them achieve a successful exit. You read that right. 83% of attempted business transitions never reach the closing table. Mastery Partners is on a mission to change that. We ELEVATE businesses to achieve maximum value and reach that dream exit.

Our objectives are simple - understand where the business is today, identify opportunities for dramatic improvement, and offer solutions to enhance the business, making it more marketable and valuable. And that all starts with understanding the business owner’s definition of his or her dream exit.  
Mastery has developed a 4-Step Process to help business owners achieve their dreams.

STEP 1: Transition Readiness Assessment
STEP 2: Roadmap for Value Acceleration
STEP 3: Relentless Execution
STEP 4: Decision: Now that desired results are achieved, the business is ready for the next step in the journey!

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Transcript

Tom Bronson (0s): Welcome to the Maximize Business Value Podcast, brought to you by masterypartners, where our mission is to equip business owners like you to maximize your business value and achieve the exit of your dreams, whatever that means to you. With insights gained from over a hundred business transactions, we share real world strategies, lessons, and expert advice to help you build long term sustainable value in your business.


Each episode is hosted by one of our Mastery certified partners, their seasoned experts who've helped countless business owners navigate the complexities of growth, scaling, and building value. They bring firsthand experience, actionable insights, and a passion for helping you build a business that thrives. So, let's dive in.


Speaker 1 (57s): This episode is the second of a two part release. To hear part one, follow the link below. Thank you for listening to the Maximize Business Value Podcast.


Amy Morin (1m 8s): You describe your role as creating alignment across family and business systems, and what does that process actually look like, Amy?


Amy Wirtz (1m 17s): Oh, it's different, but, So, I mean, I would say here's, I use the same three gates that the value acceleration methodology teaches. Yeah. So I am coming in and doing a readiness assessment. So we call that discovery, I call it a readiness assessment. Are we ready for the transitions that are being talked about in our family system? Like what's the health of it? Are people talking to each other?


Are they having governance conversations? Do they, do they have an employment policy? Do they have education around connectivity to the business? Where are they in the development of a family council? Do they meet, do they have connectivity? Do they like each other outside of owning? Right. And, and why does that matter? Well, because it helps strengthen the decision making process. Right? Have they talked to the children or the next gens about ownership or is it a secret?


What are they sharing with them? Right? Those are things that we talk about. And then in the ownership system, I'm looking for, is there a united vision of why we own in each generation? Because it changes, right? And then what are our supporting documents? What, how do we make decisions as owners? How often are we meeting? Do we have governance? Is there cutoff behavior in the ownership group? Or some not talking to the other, which I'm sure you've seen in your work.


Yep. It happens. How many things are we owning? Are we talking about transitioning an operating company and not the land underneath it? Like, do they understand what is at the transition point? Because in my world, transitions include ownership and leadership. And the reason I'm saying that is because when you sell a business to a third party, you're giving it all up. When you do a family transition, because of the taxes structure in the United States, many families do not sell ownership.


They gift it, and many of them gift it at death. So ownership doesn't transfer until someone dies. And interesting, what really gets transferred is leadership. And then we have to talk about how does that increase in value that's produced by the new leadership team? Get rewarded. Yeah. Right. That's great. Yeah. And so there's, there's like two things there for me. So the ownership is one part of it.


Are you transferring it? If someone, I also look at if someone wants out, how do they get out? Someone wants in, how do they get in? Right? Yep. And then in, in leadership, I'm looking at the same things you do. Who's our leadership team? How old are they? Is there a bench strength? What's our culture like? What are our systems Like? How, you know, how are we making decisions inside? Are we profitable? If we're gonna bring in more family members, is it really profitable enough to bring in more family members instead of feeding two families and we're gonna feed nine, can it really handle it?


Right? Right. And it, what's the marketing like? All that good stuff. I look at all that stuff. Now, the difference between what I do and what you do is you help them operate better. I say, okay, so if we're gonna do a leadership transfer or, or here are some issues we need to, to address, is that address with family members or non-family? Do we have anything here? If we don't, we need to address it. And then I might bring in someone like you, Amy, to teach them EOS because it's not my, that's not my expertise.


Right? Yeah. I'm knowing enough where we're gonna have problems. And, and, and usually when I'm in family firms, I hear a lot of people are being promoted because they're family members, not because they have skills. Yeah. And what's that doing to the company? Or we're treating family members different than when we treat non-family employees. What's that doing to the non-family, employee retention? How do we manage our own son? How does a brother manage another brother? How do we do accountability? That kind of stuff gets a little more sticky in, right?


Yeah. But governors governance. So governance is like, are they, are they only having once a year shareholder meetings? And that's the only time they're talking about ownership decisions? Are we doing operational meetings and calling it board meetings? Or are we actually having board meetings? Yeah. And what's the difference between a shareholder meeting and an actual governance meeting? A board of advisors or a board of directors? How do we do that? Why do we do it? So I really have four buckets I work in.


Amy Morin (6m 7s): Okay. Yep.


Amy Wirtz (6m 9s): And so I measure that, grade it, give it back to them in a day and a half report process. Okay. And, okay. Workshop. Workshop kind of. Yeah. And then they say, oh, we wanna work here. God, don't make us talk about this yet. And then we action plan, just like the EPI community does. And then yeah, we do it, then we work it. Yeah. Then we come back and circle like, have we made improvements? Then we work it and we come back. I'm usually around pretty heavy for nine months to a year.


Amy Morin (6m 39s): Okay.


Amy Wirtz (6m 39s): From the very beginning triggering event, like when we get started on that readiness system Yeah. To getting through a lot of the action planning. And so typically it's once a month on that timeframe A day. I, some families are in more of a, my house is on fire. I need more attention than that. I worked with one company last year. I had so much fun with these people two days a month, or seven months. That's a lot. I mean, that, that was a very condensed, but they really needed it.


They had some stuff that had to be cleaned up. Yeah. And they're continuing to do some work now, but we took a break and they'll call me when they're ready to get back to the work, but they went through a ton of change in a really short time and they need to breathe.


Amy Morin (7m 26s): Yeah. Nice. So speaking of timing, when is it too early to bring you in, Amy?


Amy Wirtz (7m 34s): Never.


Amy Morin (7m 35s): Okay.


Amy Wirtz (7m 37s): I mean, I guess if you just started your business and it's a year old Yeah. And you're, you know, a new entrepreneur, I can't do much for you.


Amy Morin (7m 47s): Yeah.


Amy Wirtz (7m 48s): That much for me. Y yeah. I would say that if you own a family business and, and you are in a multi-generational, like I work with some businesses where I have three generations working in it together. And that might mean the oldest generations on the board and the next one's managing and like in cwe C-suite spots. And then the third generation is working in mid-level management. It's not too early to bring me in Yeah. To even get to the third generation's children.


Yep. So I have a, a lovely family I work with, and we meet once a year and we do a family forum, and it's a governance kind of approach. And we, last summer had a three month old all the way to a 92-year-old at this family forum. Wow. And so the three month old wasn't there very much. Right. But they were the meals, and I got to see them connect and make memories. And everybody went to a factory tour, even the three month old. And, and for the little people, they had coats and hair nuts.


And the employees loved, loved it, loved, loved, loved, loved, loved, loved it. And they had stuffed cows for the kids. I mean, all, it's a food company. And they, you know, they used berries. So they had little stuffed cows and they had how milks made, and


Amy Morin (9m 8s): That's great.


Amy Wirtz (9m 9s): That was really, so it's never really too early. Expose them. And I know three months old sounds kind of crazy, but I worked with the 11, 12, and 13-year-old on how do you do trust? And we played Moneyball when we talked about the first money of like, we played support Square, when's the first time money? What that, like, how do you make money? What's the first thing you bought with your own money? Do you still have it? Versus what a gift. I mean those, does that make sense?


Like if


Amy Morin (9m 40s): You


Amy Wirtz (9m 40s): Can do really fun stuff with younger kids.


Amy Morin (9m 44s): Yeah, for sure. That's awesome. So let's talk about succession and exit planning are emotional. They're not just transactional.


Amy Wirtz (9m 55s): Yeah.


Amy Morin (9m 55s): And so what's, what's the, going back to that business transition summit that I just spoke at, we did speak a lot on the topic of we don't tend to think about that or plan for that part of the exit planning process, the emotion part. But there is a lot of emotion tied up in it. So what's the emotional journey for the exiting generation?


Amy Wirtz (10m 21s): Long and hard.


Amy Morin (10m 22s): Yeah. Tell us more. So,


Amy Wirtz (10m 26s): And, and, and most of my owners are not afraid of hard work. They're not, I mean


Amy Morin (10m 31s): Right. That's why they're successful entrepreneurs, right? Yeah.


Amy Wirtz (10m 35s): But this one's weird because, because there isn't, it's not a computer program. It's not a plastic injection molding device. It's themselves. Yep. And viewing your relevancy and your importance and what you do with your time and who you are and your usability and your functionability and your relevancy. It's really what we're dealing with. Right? So they all talk about, oh my gosh, it'll be so great.


I won't be coming to work anymore. That's what everybody says. Yeah. They're gonna talk about, that's not what they talk about with me.


Amy Morin (11m 14s): Yeah.


Amy Wirtz (11m 14s): Yeah. What they talk about with me is I love coming here, even though I'm tired, I've been coming here my whole life. So even if I'm not going to be the head of HR anymore, I still wanna come in on Sundays and work in the restaurant. Well, how's that gonna work? Because there's a new HR director. Yeah. So where do you, how is that gonna work when people come up to you and talk to you? Like you're the HR director, what are you going to do? And how do you let go of your opinions in your 30 years of experience?


Amy Morin (11m 49s): Yeah.


Amy Wirtz (11m 50s): That's, you know what I mean? So, yeah. Yeah. I do. It's really hard. And that's what we talk about and we talk about finding new roles. Like if you're gonna keep ownership, what's it mean just to be an owner and not working there? Where do you sit


Amy Morin (12m 4s): In the owner's box? Yeah.


Amy Wirtz (12m 5s): Right. How does that work? What are your boundaries? What are your responsibilities? What can't you do anymore?


Amy Morin (12m 13s): Yeah.


Amy Wirtz (12m 13s): Right. And it is a process. You, you know, a lot of 'em are, I, I can't give up my office because remember, most of the business involved in that business still continues as family owned. So there's no, usually there's no family members that are gonna tell Uncle Joe, he can't come in and walk the factory floor.


Amy Morin (12m 35s): Yeah. Right. Well, especially in your scenario, the earlier where they really, what they sold leadership, they didn't sell ownership. Right. And so yeah. It that that


Amy Wirtz (12m 46s): No sale. It's gifting.


Amy Morin (12m 48s): Right, right.


Amy Wirtz (12m 49s): Yeah. Right. And so that's really, well, I didn't buy it. How can I tell them what they can or can't do? Like Yeah. And then we talked about what is buying, because a lot of the next gens say to me, I've bought it. 'cause I've worked below market salary for the last 20 years.


Amy Morin (13m 7s): Yeah. So that's my next question. So we've talked about the emotional side of the exiting generation. What about the incoming generation? The next generation?


Amy Wirtz (13m 19s): So it's so complex. So I start with you, you both generations are all three generations. Sometimes I have three are going through transitions. And if we don't start with the assumption of love, grace, and kindness, we're not gonna accomplish this. Yeah. We have to have respect that all the initiative that you have wanting to develop your credibility, your competency and your relevancy is happening with these other two generations.


They still wanna be competent, credible, and relevant. Yeah. Or changing chairs. And you don't wanna make mistakes and you don't wanna ruin what they created. They don't wanna become nothing like just the guy sitting in a rocking chair on a porch. They want you to ask them questions, they want to trust you, but they're also trying to still be credible and relevant.


Yeah. And it's happening at the same time. And it's like standing on quicksand some days. And if we remember to ask who, what, why, and where with respect and kindness and grace, we can do this.


Amy Morin (14m 40s): Yeah. Have you seen an incident, oh, sorry, go ahead.


Amy Wirtz (14m 44s): That's all the emotions that are going on.


Amy Morin (14m 46s): Yeah. Yeah. Take harkens back to when we were all teenagers, right. And all those crazy emotions that were going through our bodies. It's the same thing when you're in a transition in a company,


Amy Wirtz (14m 58s): It's,


Amy Morin (14m 59s): Have you seen a successful transition yet the family unit ends up falling apart after,


Amy Wirtz (15m 7s): But I, yeah, I, but I wanna qualify what family unit falling apart means. Okay.


Amy Morin (15m 14s): Well, just the family itself just fell apart after the whole transaction. You know, they, they


Amy Wirtz (15m 22s): In family business, if it's a successful family business transaction that doesn't happen. They would not coin that a successful, first of all. Okay. Yep.


Amy Morin (15m 32s): Yep.


Amy Wirtz (15m 33s): Now I have had branches buy other branches out or a family member say, I don't wanna be here anymore. Buy me out. Okay. Yes. And there is a natural separation of the daily contact that used to happen in the families, and they go to what, like my family does, you don't live in the same state. You see each other at Thanksgiving and Christmas. Right. Or 4th of July. So it's more that versus seeing each other at work every single day, which is happens with family business owners, right?


Yes. So when I, and then there are some times when a family member is very unhappy being part of the family business. They don't fit, they're not succeeding. And either they both decide it's not working and they sell and there's a break. And it takes some time for family to resettle after that. That does happen too.


Does, yeah. You understand what I'm saying? Yeah, I do. But if the family completely falls apart and they have nothing to do with each other anymore, that's not a successful family transfer, that's a disaster in my work. Yeah.


Amy Morin (16m 51s): Yeah. That was just a business transfer that wasn't a successful family trans business transfer. Right, right. Yeah. Yeah. Unfortunately,


Amy Wirtz (16m 58s): Point out one thing for your listeners, probably 20 years ago, if a family sold their business to another party, that was a failure. That is not the case anymore. And I want all family business owners to know that if you sell your business to a non-family member Yeah. And you harvest wealth because that's the right decision for this generation that is successful.


Amy Morin (17m 29s): Yeah.


Amy Wirtz (17m 31s): You've chosen to take that wealth and deploy it in different ways. But a family business transfer is not just a job, it's a transfer of generational wealth. So if that wealth turns into dollars instead of operating business and you allow the next generation to go start their own businesses that look and feel different with the deployment of that generational wealth, it's still a success.


Amy Morin (17m 59s): Yeah.


Amy Wirtz (17m 59s): It's okay to do that. As a matter of fact, we should celebrate it.


Amy Morin (18m 3s): Yep. That's for sure. Right? Because what, like 17% of the businesses that go on the market for sale actually sell. So whether it's a into the same family or in a, you know, a third party celebrate that. That's awesome. Yeah,


Amy Wirtz (18m 17s): It is.


Amy Morin (18m 18s): Excellent. All right, one last question, Amy, as we start to wind down and it is an action step. So from your perspective, what is one important action step that you recommend to business owners that they can take to maximize the value of their business?


Amy Wirtz (18m 38s): Stop focusing on the top line sales number. Stock it. Really focus on generating value of the business. Focus on the recasted ebitda. Focus on the nut sales. Buy multiples like value. Focusing on the value today and creating decisions around increasing the value of your Business. Prepares it for all transfers, including a family business transfer.


Amy Morin (19m 8s): Yeah, I agree.


Amy Wirtz (19m 9s): If you don't wanna give your kids and your grandkids a business that's debt and not going to succeed because what you're doing is passing on an opportunity to fail, not an opportunity to succeed.


Amy Morin (19m 27s): Yeah, for sure. Yeah. And that's what I work with companies all the time, right? We close that, the value gap, right? Wherever we're, we are seeing that we are have some leakage of value in a company we work on closing that gap. And so then you've got options. You've got the freedom you're looking for. Yeah. So a, Amy, thank you so much for sharing your insights and experiences as with us today. It really has been invaluable. I always love these conversations every week, so I appreciate it.


Amy Wirtz (19m 55s): Well, Amy, thank you for inviting me on your show. It's been enjoyable. And thank you to all the listeners. Hopefully you took at least one or two things away for yourselves. Thanks.


Amy Morin (20m 5s): Yes, thank you. If this conversation surfaced a gap in your business, reach out and let us help you close it. This is the Maximize Business Value Podcast where we give practical business advice to owners on how to build long term sustainable value in your business. Be sure to stay tuned each week and subscribe to our channel so you don't miss a single episode. We'll see you next week.


Tom Bronson (20m 39s): Thanks for joining us for another episode of the Maximize Business Value Podcast. I hope today's conversation sparked new ideas on how you can continue driving value in your business. But remember, it's not just about listening, it's about taking massive action. Visit our website masterypartners dot com for more resources. Grab a copy of any of the books in the Maximize Business Value series on Amazon or via the links below.


And don't hesitate to reach out if you want to know how to apply these concepts to your business. So until next time, I'm Tom Bronson reminding you to relentlessly execute while you Maximize Business Value.