Case Study: Creating a Path for the Next Generation

When a business owner decides it's time to retire, one of the biggest questions is often, "What happens to the business after I'm gone?"

That question becomes even more complicated when the owner's child is already working in the company.

In a recent sale of a landscaping business, the owner had built a valuable company and was ready to retire. His 26-year-old son was a key manager in the business and wanted to stay involved.

At first glance, it might seem like the obvious answer was to simply sell the business to his son.

But it wasn't that simple.

The Son Wasn't Ready to Buy the Business

The owner's son was an important part of the company. He knew the business, understood the customers, and had been working in the operation.

But at 26, he hadn't yet had the opportunity to develop all of the professional experience necessary to run a company of this size completely on his own.

There was another significant obstacle.

The business was valued at more than $2 million.

The son simply didn't have the financial resources to purchase the company himself.

That created a difficult situation.

The father wanted to retire and receive the value he had created.

The son wanted to continue working in the business and eventually grow into a larger leadership role.

Neither wanted to see the other lose.

Finding a Third Option

This is where Patrick Bombardiere of Transworld Business Advisors began looking beyond the obvious buyer.

Instead of thinking about the situation as simply "father sells to son," Patrick looked for a buyer who could provide something the son couldn't yet provide: capital, experience, and the ability to take the business to the next level.

Patrick identified a company that was looking to build a platform in the landscaping industry.

Their strategy was to acquire a strong initial business, improve and grow it, and use that company as a foundation for additional growth.

The fit was compelling.

The buyer had the capital and experience.

The son had the industry knowledge, relationships, and desire to continue operating the business.

And the father could sell the company and retire.

A Win-Win for Everyone

The solution wasn't to remove the son from the business.

Instead, the son became an equity owner in the new company.

That meant he could stay involved, continue learning, and participate financially in the future growth of the business.

He didn't have to come up with more than $2 million to buy the company outright.

He didn't have to take on a level of financial risk that would have been inappropriate for someone at his stage of his career.

And he gained something potentially much more valuable over the long term: an experienced and well-capitalized partner from whom he could learn.

For the buyer, the arrangement provided an experienced manager who already knew the business and could help lead it into its next phase.

For the father, it created an outcome that was especially meaningful.

He could retire knowing his son still had a future with the company.

The Seller Didn't Have to Finance His Son's Future

There was another important benefit for the seller.

If the father had sold the business directly to his son, financing the transaction could have been a major challenge.

A deal of more than $2 million would likely have required significant financing, and the father could have been asked to carry a substantial seller note.

That would have left him financially tied to the business well into retirement.

Instead, Patrick helped find a buyer with the financial strength to complete the transaction and provide the seller with a strong sale price without requiring the father to spend years financing his son's purchase.

The father could retire with significantly more certainty.

His son could remain in the business and build equity.

And the new owner could acquire a company with a strong manager already in place.

Sometimes Selling to the Family Isn't the Best Family Solution

This transaction is a great example of why succession planning doesn't always mean selling directly to a family member.

Sometimes the best way to help the next generation is to bring in a partner.

The son wasn't ready to own a $2 million-plus business on his own.

But that didn't mean he wasn't capable of becoming an owner.

It simply meant he needed the right structure.

By bringing in a better-capitalized buyer, the family was able to create a path that might not have been available otherwise.

The son could learn from an experienced ownership group, continue operating the business, and participate in its growth.

The father could retire with a strong sale price and without the burden of carrying a large note for his son.

And the buyer acquired a platform with both capital and talent in place.

The Takeaway for Business Owners

When you're thinking about succession, don't limit yourself to an either-or decision:

"I sell the business to my child, or I sell it to someone else."

There can be another option.

A strategic buyer or investment group may be able to provide the capital and experience that the next generation doesn't yet have—while allowing that next generation to remain involved and build meaningful ownership.

That's exactly what happened here.

Patrick Bombardiere didn't just find a buyer for a landscaping company.

He found a structure that solved three different problems at the same time.

The seller got to retire and realize the value he had created.

The son got an opportunity to become an equity owner, continue operating the business, and learn from a more experienced ownership group.

And the buyer got a strong platform with a key manager already committed to its success.

For the father, perhaps the best part of the deal was knowing that he wasn't simply selling his business.

He was helping set his son up for the future.

Sometimes the best succession plan isn't about choosing who gets the business. It's about finding the right partner to help the next generation grow into ownership.