Selling A Family Business
by Shel Horowitz
The decision to sell a long-held family business is never easy--and in the eyes of many, selling out makes it a failure. But sometimes, it's clearly the best choice. Abdow's, a small regional restaurant chain based in Springfield, Massachusetts, was sold to a larger, non-family chain 36 years later--by the two brothers who had founded the company in 1959.
Riverside Park, an amusement center in Agawam, Massachusetts, opened in 1940. In its third generation of family operation, the business was sold to a national company in February 1997.
In both of these businesses, key factors led to a decision to sell. Each needed extensive capital in order to modernize and stay competitive. Each had a unique personnel situation. And each faced marketplace pressures that would doom the business if it continued in its existing form.
Riverside Park is the more dramatic story. When Bill Carroll finished law school at age 25, he joined his father's business as General Counsel, in 1994. He had worked at the park as a teenager, doing the typical low-level jobs involved in running an amusement park, and later working up to mid-level temporary summer positions in marketing, accounting, and finance. However, "I never felt like I had a 'real job.'"
The park had never had a full-time staff lawyer before, and Carroll quickly moved from minor liability claims into employment law--advising the Human Resources,department on dealing with 1500 seasonal and 55, year-round workers. "Because we had so many easonal employees and they're so young, employment law issues become prevalent. You get so many people coming and going, a lot of the supervisors are younger. You could take care of them before it was too late. I could give seminars and train the supervisors."
From that busy seat, it was only natural for him to become part of the senior management team. And he quickly learned that some of his father's most trusted associates were not very healthy for the business. "Dad had been doing it by himself for so long that certain players, high-ranking managers, didn't have the best interests of the park in mind…There were two that I ended up firing."
But once they were gone, Bill Carroll had to do their jobs too. "I served as acting director of maintenance, and also as acting director of foods, games, merchandise, and shows. I had to pick up the duties of the people that had left. I also had to look for a new maintenance director and marketing manager." The demands of running so many departments made it impossible to sit down with other managers and look at long-term planning.
And personally, Carroll was exhausted. "I was working in the neighborhood of 80 hours a week. I counted 21 or 22 days without a day off, working till at least 10 at night. It was brutal." While his workload eased somewhat once his brother joined the firm, he still was responsible for far more than he could comfortably take on.
Though morale and profitability improved dramatically once the deadwood was cut away, fate dealt a bad hand to the park. Riverside's finance partner, Bank of New England, failed, leaving them unable to acquire expansion capital. The organizational structure made decision-making very difficult. Rumors of major competitors prospecting for nearby sites made the future uncertain. And then a series of rainy summer weekends pushed revenues way below expectations. The Carrolls approached Premier Parks, which was known to buy up regional parks--and negotiated a purchase-and-sale in only two months.
Abdow: 30 Years of Planning
When George and Ron Abdow opened their third restaurant, in 1963, they set up a structure to allow easy divestiture. But it took them until 1995 to go through the process. Over the years, four of the brothers' children had worked in the business--but, in Ron Abdow's words, "they did not have a burning desire to run a 1200-employee operation with all the problems that go along with it. They were all concerned about the family dynamics and also about listening to us, they were concerned about what the future was going to be in the next ten years in this industry." They felt the investment to keep competitive was prohibitive, and that the net worth of the business as as much an asset to protect as the family business.
The Abdow brothers still own the land under most of their 16 former locations; their buyer, a non-family regional chain called Bickford's, leases the land from them. Bickford's was chosen among several suitors, because the Abdows were committed to their employees; the new owners agreed to honor seniority earned at Abdow's. "We had over 50 employees with us over 20 years. It was important to keep a good job opportunity for those people who had given us so much time. Some of them had started when they were 16, 18 years old."
Once they made the decision to sell, the Abdows never looke back. "It was a lot of fun. We loved what we were doing. But we don't think it's necessarily what our children should do. Our father never lived his life through us, and we don't think we should force our life on our children."
For both of these businesses, selling out was not a failure, but a path to the realization of the owners' dreams--and a way to maintain a the business as a living and vital organization even when the family cold no longer carry the torch. Selling these businesses was not a failure, but a success.