Succeeding Through Succession

March 1, 2008
When I first started covering the HVACR wholesale industry in 1999, it didn't take long for me to figure out (and to be told) that a high percentage of

When I first started covering the HVACR wholesale industry in 1999, it didn't take long for me to figure out (and to be told) that a high percentage of our members in HARDI (and its two predecessors) were family-owned businesses. While this might be unusual compared to other industries, the issue of who will succeed the founder or current head remains an unending dilemma. If it is a family business, the linkage to relatives can make it a particularly vexing issue. If the business is not family-owned, who will be choosing the best successor is still of vital concern to the owners and employees.

At our annual editorial board meeting, Gary Daniels, president, Johnstone; Don Frendberg, executive vice president/COO, HARDI; and James Luce, vice president, Luce, Schwab & Kase were unanimous in suggesting that succession planning is a critical issue to the membership. We've all heard or witnessed firsthand stories of poor planning (or no planning) and the resultant issues such as horrendous tax bills, family squabbles over direction and lack of available leadership literally dooming companies. And as I'm fond of saying: “It doesn't have to be that way.”

I can think of few subjects that evoke more passion, concern and even avoidance than the subject of succession planning.

If we can agree upon any fundamentals about succession planning, surely they are these:

First, planning is important in order to effect a major transition with minimal disturbance to everyone: owners, staff, employees, vendors and customers.

Second, the most successful approach is to consider the subject in a calm, rational, measured way BEFORE it becomes a crisis or major life-changing event. Everyone knows that there's a price to pay for decisions made during moments of desperation.

Third, it is absolutely imperative to conduct the quest for answers in a spirit of cooperation and fairness. The worst “deal” is when someone you care about or respect feels later that they did not receive fair treatment. We're not dealing with air filters here. We talking about family, friends and employees with whom we've being associating for many years.

Fourth, understand that this is the time to call in the experts. You might only have to do this once or twice in a lifetime. But the very nature of this process is its complexity, and the fact that none of us are experts almost begs for the appearance of professionals who understand the broad implications of the changes, and are prepared to deal with the minutiae to which you must pay attention. You do not want to have errors of judgment or planning come back to haunt you or those you care about.

We have hopefully provided you with a variety of articles that offer insight into the process, and immediate tips and future resources for your use. We intended this issue to be a “keeper” — one that you keep within arm's reach and refer to again and again. We approached authors to write about their areas of expertise and include a reference page that you can examine at your leisure.

I am particularly indebted to Scott Weaver for a frank and comprehensive view of how APR Supply confronted this sensitive issue. I sent Scott an e-mail noting that he was providing a valuable service to all his fellow wholesalers in HARDI. Thank you.

Of course, the real first step is yours. If there has ever been a business issue that you should confront — and there is no such thing as too early — then surely it is the subject of succession planning.

In the end, we have sought to provide you with a valuable tool and an important first step in ensuring that YOUR succession planning is successful.

I hope we have accomplished that goal with this issue.

HVACR Distribution Business welcomes letters to the editor. Please send correspondence to: Tom Peric', Editor, 2040 Fairfax Avenue, Cherry Hill, NJ 08003, 856/874-0049 or e-mail [email protected].