232: A Family Business Succession Done Right with Jennifer Wilson, Oak Bay Coaching and Consulting

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Speaker B: of $45 for three months, $90 for six months or $180 or 12 month plan required $15 per month equivalent taxes and fees. Extra initial plan term only greater than 50 gigabytes. Me slow when network. Welcome to Succession Stories, where we identify how entrepreneurs can improve business value and transferability to ensure the legacy of your hard work. This is your host, Lori Barkman, and you're in the right place if you want to build with your end game in mind. Succession Stories is sponsored by the Business Transition Sherpa, providing expert advisory services for your business transition journey. Welcome back to Succession Stories. I'm Lori Barkman and I am joined by a wonderful guest today, Jennifer Wilson. So excited to welcome her to the show. Jennifer is a leadership coach, writer and speaker with wonderful, amazing firsthand experience leading and transitioning a family business. Through her firm, Oakbay Consulting and Coaching, she helps leaders navigate change, development and organizational transition. She spent 17 years with her family's business, the Canada Foundation Homestay Network. It's an organization that you might have heard of if you are looking for international education programs to Canada. They place students from all around the world with families across the country. During her tenure as UH CEO, the company grew amazingly. Today, CHN places approximately 6,000 students each year supported by a team of around 100 employees with ambitions to grow to 10,000 placements in the future. You hear that, everybody? You got to go to Canada. In 2022, Jennifer transitioned from CEO to chair and we're going to talk about that and all the perspectives, perspectives that she brings through that succession, governance and evolving leadership with her family enterprise. So today she joins us with the benefit of a reflective perspective, looking back on the leadership journey, the transition process, and everything she's learned along the way. Jennifer, thank you so much for being with me and sharing your story today.

Speaker A: Thank you so much for having me, Laurie. It's really great to be back.

Speaker B: Oh, excellent, excellent. So, before we talk about succession, take us back to the beginning. What is the origin story of the Canada Homestay Network? Your family business?

Speaker A: Yeah, I loved sharing this story. It's a really fun one. So, uh, back in 1995, which is when CHN was born, my mother was running a bed and breakfast out of our home in Toronto, and she was approached by a language school in Vancouver that wanted to open a new campus in Toronto. And they asked her if she would run their homestay program for them. So she, uh, you know, homestay program, as you said in your introduction, is, um, where international students come to live with Canadian families while they're studying. They. The same thing happens in the US you probably are more familiar with the term exchange students. That's what most people think of them as. Um, so, yeah, so she was approached, and she said, what's homestay? She had no idea. She'd never heard of it before. And she said, no, she wasn't interested. Uh, and they were persistent. They gave it a couple of months, and then they called her back again a second time and said, look, we really think that you'd be great at this. Given her experience in hospitality, they thought she'd be a good judge of character. And she consulted with my dad. He was the business person in the family, although she'd run a couple of businesses herself already. And, uh, he said, let's try it. Let's see what happens. Um, and the first month, it was April, she had a handful of students, and she was able to place them with friends of hers. And she thought, oh, this is fine. I'll just do this sort of off the side of my desk, basically. Um, the second month, it was kind of the same story, but by the time June and July hit, there were over 50 students. And she realized she really had quite a business at her hands and she needed to start doing a bit more work. So, yeah, that's how it started. And, you know, it grew from that one language school client in Toronto in 95 to we now have dozens of school districts that we work with across the country. More language schools, universities, colleges. Um, and as you said, we place thousands of students. We've placed 100,000 students since we started, 31 years ago.

Speaker B: That's amazing.

Speaker A: Wow.

Speaker B: And so for you and your journey, at what point, how, at what point in your career did you join the company and did you work elsewhere first?

Speaker A: I sure did work elsewhere. I actually didn't really intend to join the company. I'm one of those stories. Um, out of university I worked as a registered midwife. So kind of like a licensed midwife, um, in the United States. And I loved that career and was intending to carry on with it um, until my now ex husband decided he didn't want to be married anymore. And I was left with ah, a one year old and a three year old at home and no on call childcare. So I sort of fell into the family business right around that time I was going through that personal crisis. Um, our employee in my city, um, quit at the same time. So it created a vacancy that I could easily fill and I could work from home. So so that's how it started. It was kind of like a job out of convenience that I could work with my parents, um, and be at home and kind of look after myself to some extent. And I kept telling myself this was temporary. Um, and ah, then over the course of a couple of years, thinking as the distance between my life and my midwifery career kind of grew, um, I decided to sort of commit myself to the, to the work and see where it would take me. And I told my parents I would give them five years and then every five years I re upped for another five years.

Speaker B: Another five?

Speaker A: Yeah.

Speaker B: That's amazing. So your mom and dad both were in the business it sounds like. What was, what were their roles? Yeah, exactly.

Speaker A: So my mom started it in 95. My dad was working as a management consultant at the time for Ernst and Young. Um, he ended up stepping away from that role in 2000. So five years in and joined the organization as our CFO. He's a, um, CPA, um or CA I guess um was the old designation in Canada anyway, so he's got the financial background and he knew how to um, you know, turn around businesses as a management consultant. Um, and he had the vision for how the organization could grow outside of Toronto and across Canada eventually. So yeah, they made a great team. My mom was really the operations. She's the heart of the organization. She really brought the values. Um, and uh, and she's that kind of like level 5 leader. Very soft spoken, she prefers to be kind of behind the scenes. And my dad was the sales guy who would go out on the road and help grow the business and he, um, managed the numbers, so.

Speaker B: Yeah. Wow. This sounds like they're a really, really, ah, good, good team from a ownership standpoint. Do you know if it was 50?

Speaker A: 50 exactly? Yeah. The two of them were 50. 50. Yeah.

Speaker B: Gotcha. So we're going to flash, ah, forward here because we have a, A bunch of years to cover. So you grew company and then eventually there was some conversation with your parents about succession. Let's talk about that. What. How did that start and at what point in the journey.

Speaker A: Yeah.

Speaker B: Did that, did that start to happen?

Speaker A: It started, um, so I joined in 2005. And then within a few years, as I said, I decided I wanted to commit myself to the organization, um, and sort of see where it took me. Um, and because I love school and love learning, I decided I needed to go back to school and get an MBA in order to feel qualified to run a business. Uh, and so I did that. And then, um, the year that I graduated was when I took over as CEO from my mom. And she was really excited at that point to pass, um, the reins to me. Um, both my parents felt like I had kind of proven myself. Um, they never had any doubt. My parents were very supportive, uh, and they wanted to, um, bring sort of my fresh energy and ideas into the organization in the leadership capacity. So I took over from her at a, um, there's sort of a fun ceremony we had at one of our, um, retreats that, where we bring everybody together. Because we're based all across Canada, our team is entirely virtual. Long before COVID we were a virtual organization. And in order to build, um, team morale and camaraderie and so on, we would bring people together from all across the country every two years. So at one of those events, um, my mom passed me, um, very symbolically, the little recipe box that held the, um. Before we had a database, we had all of the host information written, handwritten on little recipe cards and stored in this little box. And that was basically our analog database. Um, so we didn't use the recipe box anymore, obviously by then. Uh, but she handed it to me as part of the switch of transition. Yeah.

Speaker B: Wow, that's. That's cool. She did that in front of everybody was like, you know, sort of this, uh, you know, th. Those moments can be very obviously very memorable, but also very important and significant. Not just for you, but it was a significant move to do that in front of the entire company. Everybody at that point knew you were literally getting the. The box or getting the baton.

Speaker A: That's right. Yeah. It was really Good. Um, and they didn't sort of recede into the background. My parents were very active in the business right up until the time when I, um, decided to leave and the three of us ended up kind of retiring together. Um, so I always felt like I had a tremendous amount of support as a leader. Um, we, we would sort of joke about the fact that I was my parents boss, you know, like just they

Speaker B: stayed in the company. What were their roles?

Speaker A: Yeah, exactly. So my mom, again, like I said, she loved to be a little more behind the scenes. So she was um, toward the end especially was basically doing sort of any jobs that, that were helpful to given the time of year or kind of if somebody left the organization and there was a vacancy and you know, work that needs to be done. She, she was sort of one of those people who could do any of the work. Um, I always really admired that about her because she was definitely one of those leaders who embodied that advice that you hear if you're a leader, you ought to know all the roles within your organization. She was definitely one of those people. And my dad maintained his role in um as our finance. So he was basically our cfo. Um, so yeah, the three of us worked really closely together. We met every week. Um, we called it our trio meetings. Um, and my dad still traveled a lot with me, um, at the, you know, in the first few years we did a lot of business development work together. Um, my dad is kind of old school as you can imagine. He's um, 82 now. So uh, yeah, just given his age and his experience, he was very big on um, consistency and continuity with transitions. So when I was starting to take over, we would tag team. Like we'd go together to meet with clients and that really to him was a really important show of strength, um, in terms of us being a team. Um, and that's one of our core values as an organization was teamwork. So we always, um, you know, we're looking after other people's children. These are complicated cases and a lot of, a lot of times, so we, we never felt like we were smart, um, enough to know it all. Um, we were always very humble with our approach to leadership and managing, um, conflict and so on. So uh, yeah, so coming to addit as a team and looking for second opinion and all of that was really core value for us.

Speaker B: So what was the, what was the timeline? Just to think about duration. Did your mom and dad start talking to you about CEO transition two years ahead of time? A year ahead of time?

Speaker A: I would say it was probably around the time that I decided to start the MBA. So about two years before.

Speaker B: About two years. Okay. Yeah. And at what point in that two years did it become known outside of the three of you?

Speaker A: Oh, gosh, uh, it was 20 years ago now. I can't quite remember, but I think it was m. Pretty close to when we actually announced it at the uh, agm. Yeah.

Speaker B: Okay.

Speaker A: Yep.

Speaker B: And so the trio, you guys were the trio for, for quite a while there. And um, our. And then you reached a point. I mean obviously we're, we're skipping a lot of things here. I said in your intro there's a lot of growth in the company. You made your mark in a lot of ways. Um, and I'm interested in that, of course. But of course I think the, the piece of the conversation now is going to turn to your transition. And, and at what point did you say to yourself, hey, I'm going to think about my own succession here? Uh, tell me about the team you had in place at that time and what your headspace was when you started to think about your own success. Succession.

Speaker A: Yeah. So as I said, it was always in the back of my mind, um, even from the beginning, because again, it was the kind of role that I'd sort of fallen into. Um, I made it a very deliberate choice, obviously after that initial decision. But, uh, it was something that I asked myself on a regular basis. Am I happy? Is this what I want? Um, over time. And in 2018, I joined a program called Strategic Coach. And for those of you who haven't heard of it, I highly recommend it for anyone who, um, works as an entrepreneur. Um, there is an income threshold that's required in order to get into the program. So it's really designed for entrepreneurs who have reached a certain level of success with their organization and are trying to pull themselves out of the day to day a little bit more and be able to focus more on the business instead of in the business. So one of their sort of catchphrases is that they help entrepreneurs build, uh, what they call a self managed organization. Um, so I started that program and I ended up doing it for about three years. And it was part of their, um, tools and reflection and work that I was doing in that program. Um, that I really came to the realization that I was ready to make a change and I knew that it would not be a fast transition. So I put into place for myself a five year exit strategy which meant that I coincided with my son, my second child's, um, graduation from high school. So around the time that I was going to become an empty nester, I felt like that was kind of a moment in my life where I was going to be ready for something new. Um, and so I was planning. So from February 2018 to. I was planning to exit in September of 2022, and I ended up leaving in December of 2022. So I, I stuck the landing on that, despite Covid, which I'm pretty excited about.

Speaker B: Well, that's really cool. I think regardless of the methodology, like if it's Strategic Coach or any other, um, planning tool, you know, this is something I do with clients as well. I call it the exit timeline. And there's an age and there's a life stage. And I think both are important because sometimes on the age side, we anticipate maybe having less mobility or, you know, less ability to do the things that you might want to do after you transition from the business. So it's a really interesting tool. Um, uh, the exercise that you went through. I like to say we kind of work go forward to, to work backwards. Because then you say, yeah, okay, if I have five, what are the things that I need to get done in order for this succession vision to come to fruition? And you might need certain things. So as you map that out, Jennifer, what were some of the holes that you said? Oh, gee, if this is going to happen in five years, here are the big things that I need?

Speaker A: Yeah, it was, uh, it's such a great question. So one of the biggest things was that I needed to identify my successors, obviously. And I had two people in mind that I thought would both be great at the role, but both of them were in middle management positions. The organization by design had always been very flat in terms of the hierarchy. It was basically me, um, and then we had, uh, three regional directors and then our frontline team. So there were really only three levels. Um, I understood pretty quickly that we needed to transition, ah, those two candidates into more of a director, like a higher director sort of senior leadership role. Um, in order for me to be able to start delegating more work to them over time, um, and helping myself kind of step more into a strategic position and out of operations. So we created director of operations position. But we couldn't do it overnight because obviously that would command a different salary. Um, it needed new leadership, uh, you know, management underneath. Uh, so we needed to get the organization to a point financially where it could sustain that kind of structure and also be able to pay a CEO and a COO and a cfo. Like um, my parents and I were um, probably paying ourselves under market rates at that point. So, um, the financial kind of like stability of the organization and transitioning into those, that new structure was one of the biggest challenges that we faced initially.

Speaker B: So the two roles was the two directors eventually became. Was it operations and then. And then financial. Those, the two.

Speaker A: So my dad stayed in the finance role, um, but the two new roles were Director of Operations and um, the other person. So that was the um, Mela, she was the person who ended up becoming one of our CO CEOs. And then the other person, Nathan, he was in a role, um, more around business development. So he was like a director of business development. Business development.

Speaker B: Okay, well you did a big reveal right there, which is, uh, we hadn't mentioned it yet. So there was a co CEO role created. Um, let's unpack that. If this podcast is helping you think differently about your business, then you'll love my book, the Business Transition Handbook. It's a practical guide for entrepreneurs who want to build a business that's scalable, valuable, and ready for the future. It's five star rated on Amazon. Grab your copy at, uh, loribarkman Me book or check the show notes for the link. What is a co CEO role? And how did you figure this all out as part of your succession?

Speaker A: Yeah, so the co CEO role means that there are two CEOs instead of one and they work really closely together, but they have different, um, uh, accountabilities. Um, we got there over time again, as I did a lot of analysis and reflection about my role and what the Director of Operations would do and how that was different from what I was doing. I realized pretty quickly, and I don't say this to sound egotistical, but the work that I was doing was more than one person's job. Um, and I also felt really strongly that as I said, over the years, in my entire tenure, I never felt like I worked as a lone CEO because my parents were so closely involved in everything that we did. Um, they were a really important sounding board for me, um, both of them in different ways. Um, and it felt like for us to identify one CEO, um, as part of my succession would be a departure from how we'd always run the organization. Uh, so we were kind of toying with this idea. We ended up hiring, um, a consultant, an HR consultant who specializes in helping organizations build co CEO structures. And she was, um, incredibly instrumental in helping us kind of make that work. Um, and she was reassuring in the sense that she said there's lots of skeptics out there about this model, but it can work. And here the. She said there were two things that needed to happen in order for it to work. Um, one is that the people need to be very different from each other. They need to have different skill sets, um, and bring different things to the table. And as I said they need to have different accountabilities. So they do have a set of shared accountabilities, um, but otherwise they're very separate. So in our case we have one who manages operations. That's the person I mentioned earlier. And then the other person takes care of finance and IT and hr. And in our case, um, host capacity development, which is a very uh, important part of the work that we do.

Speaker B: With two in a box, how ultimately does it, how does responsibility land for accountability for growth? Do they share? How do they measure success and KPIs for them individually?

Speaker A: Yeah. So we uh, again as part of this transition with the help of this consultant, because we'd never had a board before, so as part of the transition we created of directors, we'd had a strategic plan in place, um, but that needed to be really refined and we teased apart. It was kind of a mess of a strategic plan and an operational plan in one. So she helped us tease those apart. So we now have a strategic plan that the board considers and an operational plan that the leadership team develops and implements with their staff and board. Our us as a board, we don't even look at the operational plan. In the strategic plan. There's a column in addition to the metric that we're tracking the objective. How does this relate to our goals, um, and deadlines and targets and so on. There's a column that says accountability. Each of the line items in the strategic plan. There's one of the two CO CEOs who is accountable for that one task. Um, uh, and then overall, um, they don't have very many shared accountabilities in that role. I think there's maybe one or two. Um, and then when we do our annual performance review process with them, um, again those are teased apart so they're only scored on the strategic plan items that they've been um, named as accountable for.

Speaker B: I love that you differentiated strategic plan and operational plan. There's some systems out there that are great but I always describe them as their best four the operational team. You know it gets into a lot of detail about 90 day sprints and rocks and you know, not to pick on eos. It's a great system but it is not Meant for a board level or, um, you know, even sort of the top level governance. And, and some folks have a hard time understanding why I say that. So it sounds like you inherently agree with me. Which is, which is, uh, which is great. Not to just be agreed with, but that it's purposeful to have a separate strategic plan. What is a strategic plan? At its core, it's about the big picture and looking ahead five years, whereas, um, operational plans tend to be, you know, Shorter Time horizons, 90 day sprints, things like that. Um, and they have to intersect, of course. But I love how you describe that. Um, I also want to recognize. Yeah. You know, in conversations I've had and you read the headlines and co CEO ships, you hear about the ones that don't work, like the famous big software companies, they'll have two in a box, you know, that I won't name names, but you know, they had a CEO in Germany and a CEO in the US and it just didn't work. And so you can try to unpack. Well, why didn't that work? We don't really know. We're not insiders. Um, but we can guess why that didn't work. And um, when you had shared that you had a co CEO success story, I was like, wow, that's really amazing. So sounds like the formula for success involved a lot of planning, including having some guidance from an outside. And, um. Yeah. I'm just curious, were there any pitfalls or was everything swimming or did anything go wrong?

Speaker A: Uh, everything's been swimming, um, since we established the right people in those two roles. So we did go through. Um, so you asked earlier about the kind of time horizon around how we made announcements. When I transitioned from my mom, um, when it was my turn to transition, I gave those two people that I had in mind for the role 18 months lead time to think about what we were trying to accomplish together and, um, to help me with the continued sort of, um, transition around delegating tasks and thinking. I mean, and it was also sort of during COVID Covid was, you know, decimated our industry, as you can imagine, that nobody was getting on planes to fly across the, to the world to go to school. Um, so we suffered. Um, I'll just give you some numbers there. In January of 2020, we had 150 employees. And by October we were down to 50. We laid off 100 people in the first six months. Wow. Um, it was awful. Anyway, uh, not to make light of that, but I really needed those two people to be, um, aware of what we were planning given the kind of existential crisis that our industry was facing. Um, I needed their support and their um, understanding of our, of our plans. So um, yeah, so 18 months lead time and then within a year of that announcement that I'd made to those two people, one of them decided that he didn't want to be part of the co CEO model. He basically said um, it's uh, like I'll do this on my own or I won't do it at all. Um, and so he you know everyone told me at the time that he was, you know by making that decision um, he would end up exiting the organization. And I didn't want to believe it but it was true. You know, um, after the transition happened he, I think he stayed for like another six months or something and then he was gone. Um, so we had to identify a second person to work alongside the other, um, the you know, beside Mela. And um, it ended up being our um, finance person who was working just directly underneath my dad. Um, and I have to say I, um, I didn't see what my dad saw initially. I had a, I, it took me a while to kind of come around to this idea that they would make a good team. Um, but I, you know, trusted my dad's judgment and um, other people could kind of see like the consultant saw it. So, so I eventually got on board and I was blown away by how um, committed he was, how excited he was, how much he um, really put his um, heart and soul into the organization and really believed in our values. And that's always been really important to us. And I have to say both people who are working as our CO CEOs have both said to me they would not want to do it alone. They both really feel like having their co CEO alongside them makes the job manageable and it gives them the kind of um, support that they want on a day to day basis. I mean I think leadership is really lonely. Um, we hear that over and over again and you know they have each other and they have us um, still as the board. So uh, it's been, I think that's part of the reason it's been successful is that they want it. Um, they, they believe in it and they um, embrace it in a way that's making it work.

Speaker B: So you, your mother and your father are the, are the board?

Speaker A: We are. Um, about a year ago we invited my brothers, I have two brothers to join and we also invited our accountant as our sole sort of non family member board member. So um, so we have Six people on the board now.

Speaker B: Okay. Mostly, mostly a family board, but. But designed as governance. Not only a family board.

Speaker A: Yeah.

Speaker B: Um, and the two brothers, they don't work in the business.

Speaker A: Not at all. They're lawyers. Yeah.

Speaker B: Okay. Everything we've talked about is interesting. I think it's a good example of leadership succession planning. And I'm uh, emphasizing leadership succession. You had internal transitions with those leaders, which is also interesting. You didn't bring anyone in from outside. You grew them from within. And so that's also worth underscoring. Now we're going to talk about ownership transition because I, I talk about this all the time. There's a difference between ownership transition and leadership because they don't necessarily need to be the same people. They can be, but they don't need to be. Now in, in your company's uh, story, we, we do have that transitioned. So uh, tell me a little bit about that. What, what started to transpire for your mother, father? Again? They were 50, 50 equity owners. What did they start to think about for the sustainability of the business from an ownership and uh, protect the value perspective?

Speaker A: Yeah. So they wanted me to have some equity share, uh, especially given, as I said earlier, my under market salary for many years. They wanted to um, make sure that I could enjoy in uh, the benefits of having grown the organization the way I did. But they also wanted to um. My dad's always been really um, aware of equity or equality, maybe I should say, between my brothers and I, from a um, wealth management, estate kind of um, transition perspective. So he struggled for a long time with how he could um, both recognize my contribution to the organization, which is ostensibly a family asset. Right. Um, and also make sure that in um, like in. In an estate kind of transfer perspective that my brothers would um, feel like they had a fair shot at their share. Um, so we ended up working uh, with an accountant who specializes in family businesses and she helped them do an estate freeze. And we ended up transitioning the ownership of business into a family trust. And the. And then the way that we handled the kind of disparate, um, and equal parts, um, was through uh, the beneficiary structure, um, and through dividend payments. So um, yeah, that was a very complicated, lengthy process. My dad is somebody who needs to be really comfortable with um, decisions in order to move forward with them. And his way of um, managing discomfort is basically to throw out the anchor and stop the process. So it took us several years for us to iron out not only the way that this structure, um, would work, but then Also the shareholder agreement that kind of followed it.

Speaker B: Gotcha. And so are you able to share the structure you end up putting in place with you and your brothers?

Speaker A: Yeah. So again um, as part of the family trust, all five of us are beneficiaries, my brothers and my parents. Um, and then there have been uh, extra dividend payments that my parents have made for me, different from my brothers. That um, in my dad's mind kind of um, leveled the playing field. So now going forward we all get paid the same dividends. So there was sort of like this retroactive kind of um, payments that were made uh, over the last several years as the organization, you know, um, was successful and, and had the financial health and to do that they were able to make those payments. So. Yeah.

Speaker B: And that's like a profit distribution?

Speaker A: Yeah, pretty much. Yeah.

Speaker B: Gotcha. Did you have anything in place for the CO CEOs as well? For from a management retention standpoint, we

Speaker A: didn't and that was a big gap. Um, and one of the things that we identified fairly quickly was that um, they had still a very strong leadership mindset but not the ownership mindset. And again this is something that I think you're really good at distinguishing. And so we felt like giving them some equity would help foster that ownership mindset. Um, and we were seeing it in sort of day to day decisions that felt a little more shortsighted to us or they felt, felt um, less strategic and more operational or more tactical. Um, and uh, we really believed in them and their potential because they were saying the right things. But sometimes it didn't show up the way we wanted it to. Um, and again my dad's background in business, he'd seen this work in other contexts. Uh, and then the other layer to all of this that I didn't talk about was um, that I got really burnt out of my role. Um, that really hit me, you know, during the COVID years, um, for obvious reasons, um, but it had been brewing before that. Um, and I think it was partly related again to the fact that this was not always my dream job and I knew I had other things that I wanted to do with my life. Um, and so I was really ready to give up ownership. I really didn't have a strong um, desire to hold on to the organization and in fact I felt for a long time like I wouldn't ever really be able to sleep at night until we didn't own it anymore. Because even though I wasn't working day to day in a leadership capacity, I felt like it was always Going to be kind of in the back of my mind. I'm sure you've heard other guests talk about that dynamic. So, um, so I was quite eager to sell the business. And when we started to think about how the CO CEOs would, um, benefit from equity share, it seemed like maybe that would be the solution is to sell all of it to them. Um, and we started down that path. But my, when my, when we first floated it past my brothers, they objected. They were not happy about that decision. And um, and uh, and so we had to kind of like walk that back, which was hard because we'd already started talking about it with the CO CEOs.

Speaker B: So we, so the, the, the walk back was the co CEOs thought they were going to buy 100% of the company and your brothers said no, no way. Wow. Okay. And so that walk back, that was tough.

Speaker A: That was tough. And it was such a great learning experience for us, um, that we, we ought to have gone to our brothers first before we started talking to the CO CEOs. And again, I was just like so determined. It was partly my fault for having kind of had blinders on around like, well, of course this is the right, you know, decision. And, and we'll show it to my brothers and they'll think it's great. And I was wrong.

Speaker B: Was that before they were board members? Yes, yes. Because clearly this would have been something discussed at a board meeting. But they weren't in the meeting. Ah, interesting. Uh, takeaway. If you're not in the room, you're not in the room. Right? Um, no, but, but there it, yeah, there's business and then there's the family business. And so this is the business of the family. Uh, understandable how they, how they felt about that. How did you solve this challenge?

Speaker A: So we listened hard. Um, we went back to the drawing board. We answered all my brother's questions because they were coming at this fresh. Like for the first time we again learning experience around communication and transparency, um, and anticipating or not, um, making assumptions about what they would understand about these transactions. A lot of it was very basic kind of education that we had to do around how you value an organization. And what does it look like to. In our case, we were doing what amounted to a management buyout. So when you look at that at a very high level surface, um, um, perspective, we're basically saying that they're buying the organization with the money that the organization is earning. So that just made no sense to them. You're basically giving it away. I don't get it.

Speaker B: So, so how did they fund it then? Did they get bank, commercial bank loans?

Speaker A: No, I mean that is still how we ended up doing it, but we went from 100% to 20%.

Speaker B: So the company basically bonus them cash and then they use the cash to purchase equity.

Speaker A: But it's happening over time. So there, there isn't over. Yeah, there isn't a single transaction because there isn't enough um, annual revenue for uh, uh, for that to, to work in one fell swoop. So we're, we're kind of like partitioning it out in pieces over several years. So they're not going to get 20% overnight, but they'll um, get there over time.

Speaker B: Yeah, gotcha. Uh, so the conversation with your brothers, if I was in the room, I would guess with something like this, well, we are going to bonus them cash for performance anyway and they could choose to put it in their pocket or they could choose to purchase equity with it. So you're not, not gifting them the shares? Yeah, and they're purchasing it. They just happen to earn a bonus. Then they, then. So there's obviously different, you know, kind of tax implication of gifting versus purchase.

Speaker A: The other thing that I found helpful was to um, look really closely at the timing of the transaction. So instead of saying to yourself, um, you know, they're paying for the business with the revenue of the business, um, we said, well we've sold it on day one, let's say, um, so now they own part of it and then they're paying us back over the next several years. So as opposed to we still own it and it's our money and they're taking it and then giving it back to us. Right. Like. So I think that was another kind of piece, um, that I think was helpful in kind of explaining it.

Speaker B: Yeah, helpful. Mind shift then. Your brother's both being lawyers. I'm sure that also made it like very uh, very interesting. Um, so how did you, how did you settle on the, on the split? What was the fun, what was the split you determined for family versus M MBO management bio?

Speaker A: Yeah, the 80 20. Um, it's there, there some of it was to do with um, laws in Canada where uh, you know, you have to reach a certain threshold in order to clear. Um, I think it's like a tax related thing. So they, so that was part of it. I think they, they each needed um, over 10 or something in order for us to clear that threshold. So that was, that was mostly why.

Speaker B: Yeah, gotcha, gotcha. And so how many Years into it now on the repaint, on the kind of the buy. The buying. Buying of the shares. How many years are you into it?

Speaker A: Not even one. We just.

Speaker B: Not even one. Okay. Just started.

Speaker A: Just started. Yeah. We literally just signed the shareholder agreement at the end of um, like the end of last year. So just a few months ago.

Speaker B: So that was a pretty big lengthy process.

Speaker A: It was, yeah, yeah. Um, exactly. And we again we, I think we assumed it would move more quickly than it did. So that would be another kind of tip for your listeners is don't underestimate how long these processes take.

Speaker B: Well that's a good segue because we've covered so much ground. I mean we talked about leadership succession from the founders to you second gen, from you to management on leadership and ownership with the family transition to these partial mbo. I mean it's a fascinating story. Um, as for my founders who are listening or my next gen leaders, what are those top takeaways that you'd like to share as a summary of what you would either recommend they do or don't do?

Speaker A: I think I mentioned a couple. So we talked about communication and keeping your um, family informed of your plans even if they're not active in the day to day business and never will be. Um, and uh, besides that I think you mentioned another one which is to work with professionals. Um, the first person we ever hired as a kind of a consultant was um, somebody who helped us develop our um, organizational values and our family values, um, sort of that sort of system and understanding how those overlapped and, and helped my parents and I work together in a really effective way. Um, that was really powerful. We start, we did that like 15 years ago or something. Um, so I, and I'm a, as you mentioned, a leadership coach, um, and consultant myself now. And I really, I'm not saying this to kind of like toot my own horn but because I've had experience working with these folks. They bring so much expertise and insight and just that outside kind of voice, um, that's, that feels more neutral when. Because these topics can get pretty heated and difficult. So yeah, so working with consultants is really important. Um, taking your time with it as I said, um, not kind of trying to rush it. Um, uh, yeah, that took a lot of patience for me to again to kind of like understand my dad, dad's process especially, uh, and make sure that he was really comfortable with what we ended up with. I mean you're making. These are long term decisions that have far reaching impacts not just for us but for future Generations. So, uh, it's behooves us to, to really take the time and get them right.

Speaker B: Yeah, absolutely. That's amazing. Thank you so much, Jennifer, for coming on today. And I know people are probably curious more to hear about what you do and your, your coaching and advisory services. If people want to get in touch with you, what's a good way to do that?

Speaker A: Yeah, so my, uh, coaching website is oakbaycoachingandconsulting ca. It's a long one. Um, and I'm also on LinkedIn. That's where I spend most of my time for social media. So you can find me Jennifer Robin Wilson and, um, and again, oakbay coaching and consulting there too. Awesome.

Speaker B: Ah, and we'll also have those links in the show notes. Uh, again, I want Jennifer, thank you so much for being on Succession Stories, going through everything and there's so much to learn from your story. I appreciate it and for my listeners, thank you for being with us. If you want to get all the episodes, be sure to follow Succession Stories and your favorite streaming player. And you can also find us on YouTube. So once again, thanks for tuning in to Succession Stories and we'll see you next time. Thanks for joining us on Succession Stories. Before we wrap, is your business truly ready? And are you? If you're not sure, that's exactly why I created this succession readiness assessment based on the built method. In just a few minutes, you'll get a clear snapshot of where you stand and what might be holding you back. You'll find the link to the assessment in the show notes. Btsherpa.com Succession

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