Our guest this week has come up against some of the biggest challenges you can face in business: fallouts with family members, the sudden inheritance of a business when his father got ill, an industry changing too quickly for his company to keep up with etc. etc.
Across a number of different companies, Paul Harry has learned a lot about exit planning and life in general. Despite the choppy waters he has managed to have a highly successful career… there really is no better man to listen to about the dos and don’ts of exiting a business.
Family fallouts and family buyouts: the moral of the story with Paul Harry
When a 22 year-old Paul Harry got the call to say he was suddenly in charge of his father’s printing business, he sure had to learn quick. He gave us a great interview about the trials and tribulations of running, sharing and selling the family business, but if you’re pushed for time and can’t listen, check out the highlights below:
Be brave when it comes to negotiating with family members:
Paul sleep-walked into an agreement with his brother that proved to be a long-term headache. Better to have awkward conversations and get everything out in the open, rather than have issues fester.
Over-reliance on one client lowers your sale value:
Although the business was profitable, the value of the business was significantly lower than Paul’s Dad bargained for because one client represented 60% of the business.
…but a low sale value is good if you’re selling internally to family:
When the valuers came back with the valuation of the business his father said that it was way too low, but didn’t understand that a low value would be a good thing when selling internally across the family.
Focus a sale by understanding how much cash you need to sustain yourself afterwards:
Paul and his father had no conversation about how much cash he needed to live his life.
How long did it take him to sell?
How did he value the company?
When it was a family business it was valued by an external consultant. When he was in sole charge he valued it himself based on historical knowledge and gut feel from his industry experience.
What motivated him to sell?
The tension with his brother and the changing face of the printing industry.
What did he do afterwards?
He took a job in the firm that lasted less than two years. He then dabbled in a number of different businesses. Today he is one of the partners in a consultancy firm called Next Stage Growth.
What were his motivations when looking for the next challenge?
Nothing more specific than “something that looked interesting”.
Wise words for the road:
“The biggest issue [with many businesses] is the lack of team. People often think that they have a team but they really don’t. The biggest thing I’ve learned from all this work is that with collaboration and a true team you can do anything – you can change people’s lives.”
“When you’re the CEO of a company, you do have to make tough decisions and sometimes they’re not popular, but that’s not the same as when you’re working through issues in the company day-to-day and you’re looking for input and the value of the entire team.” [i.e. for day-to-day business you need to be diplomatic and build a consensus rather than just laying down the law]
“Read a book called The Advantage by Patrick Lencioni”
Email – firstname.lastname@example.org
Phone – (612) 812-3121
Skype – paul.harry1955
Website – https://nextstagegrowth.com/