Engaging 3 | Pad Thai
Engaging 3 | Pad Thai
I am sitting here in the kitchen, eating some Pad Thai left over from dinner and drinking a beer. Everyone else has been asleep for hours, but I can’t get our visit with Dan Sumner, or our Owners Council call, out of my mind. Dan wants to acquire Owen Products for a lot of stock and a little cash. I know we’re doing the right thing as owners, exploring the opportunity carefully, investigating our options. But this whole situation is just so strange!
My dad died on January 3, 2010 and, honestly, I don’t think I’ve taken a deep breath since then. I never really expected to run the business – what I loved was working with my dad. Then the aneurysm nailed him and the board said “Mike, congratulations.” I don’t like to admit it but it was tough for me, taking over the business. I never felt prepared. We’ve made it – both plants are running ok, recoveries are within plan, and the sales have been steady. It’s just that whenever I think I am going to be able to free myself up to focus on something beyond the day-to-day, some new crisis breaks through the line and I get sacked. The evening Dan called, I was looking at the sales plan for the home center segment – we really need to figure out whether the added volume we’ll get from selling to the Big Boxes is worth the cut in margin given the price points they demand. Our competitors just make their pots thinner to save on raw materials and shipping, but the quality suffers. But our name is on the box – cheap is not an option. We need to figure this out or our sales budget will be in trouble. But instead, all I can think about is Dan Sumner.
My dad always liked Dan and I think he would have explored this deal had he been around. I say, “I think” because I never was entirely sure what Dad would do – he kept his own counsel and did what he thought was right, even if that was different from what he thought was right the year before. Not that he was fickle – he was just flexible when he had to be, I guess. He didn’t so much teach me the business as expect me to watch him and figure it out. That’s how he learned from his dad.I’ve known Dan pretty much all my life – he’s like an uncle to us. It was strange touring his plant and experiencing “Dan the Salesman” instead of the “Dan our Family Friend”. He clearly believes that an acquisition will propel the combined companies to a new level. But what does that mean for us? For me, specifically? And for our employees? I can get the business case for this deal, I think, but the longer I mull it over, the more questions I have. Would I still have a job? Dan says he needs me, but Christopher says he’s never seen an acquisition where
I’ve known Dan pretty much all my life – he’s like an uncle to us. It was strange touring his plant and experiencing “Dan the Salesman” instead of the “Dan our Family Friend”. He clearly believes that an acquisition will propel the combined companies to a new level. But what does that mean for us? For me, specifically? And for our employees? I can get the business case for this deal, I think, but the longer I mull it over, the more questions I have.
Would I still have a job? Dan says he needs me, but Christopher says he’s never seen an acquisition where senior staff of the acquired firm had any real role. He says most leave – or are forced out – within two years. So would I go from running this place, to being a figurehead manager, to being a shareholder, just watching? I’m 46. I can’t retire. I have kids in college. Divide the cash Dan is offering four ways and maybe it pays for my mortgage for a couple of years. But what would I do? And then I ask myself, should what I, personally, want from my career figure into our discussion? Am I being selfish?
One of our directors the other day asked about the industry and the facts are facts- there are only a few clay pot manufacturers left in this country. Would Sumner Ceramics acquiring us change that? Are our chances of long term success any better if we join together?
And if we do this deal, I’ll own Sumner Ceramics stock, not Owen Products stock. Do I trust Dan’s expertise more than ours? If Dan is a better manager than I am, and could make the business more successful, then is that how we should decide? And what if I were free to pursue what I wanted to do, instead of what it seemed I was supposed to do?
Enough. Enough. I need get some sleep. Or at least try.
Family Business Governance Analysis
- Mike Owen’s musings in the quiet safety of his kitchen late at night point out the range of emotions that a potential transaction can trigger for participants in a family business.
- Readers of Engaged Ownership: A Guide for Owners of Family Businesses may recall that Mike has struggled with his new role as CEO since he was promoted to CEO by the board immediately after his father’s untimely death. He wasn’t groomed for the role; yes, Charlie figured that Mike would run the company, but hadn’t commenced any sort of formal succession planning at the time of his death, beyond executing his estate plan. Mike had been VP of Sales for Owen Products East, so his view of the business is probably narrower than it would be had he gone through a training program (formal or informal) that gave him perspective on operations and finance, as well as sales.
- Mike is concerned about what he might do—and how he might pay the bills—if the business were sold. Dan Sumner is proposing to purchase Owen Products, Ltd. for stock and cash—Mike recognizes that his share of the cash won’t be enough to live on, and that stock in Sumner Ceramics may or may not pay dividends.
- Mike is clearly wearing three hats as he muses—as CEO of the business, as an individual who needs a paycheck, and as owner. He’s thinking as CEO as he regrets not having the time to really think about the sales plan for the big box stores. He’s thinking as an individual as he contemplates his twins’ college tuitions and his own job prospects. And he’s thinking as an owner as he considers whether Sumner Ceramics stock is worth the trade for Owen Products stock. Not surprisingly, he finds himself conflicted on many levels, and we’ll see his internal conflicts play out over the course of the negotiations with Dan Sumner. We’ll also get to see Mike’s siblings go through the same sort of concerns, but from different perspectives.
- One last point: we can see in Mike’s recounting of his appointment as President, how much he misses his father. Not all children enjoy working for their fathers, but for those of us who did (and I count myself in that group, as I worked closely with my dad for a number of years when I joined the family business), part of the attraction is working with our parents, and participating in the business that has been such a big and sometimes all-consuming part of our family life. I don’t mean to suggest that working for a parent is easier than working for a non-family member—it often isn’t. You never get to leave your work at the office, and disagreements can run very, very deep. But there can be something deeply gratifying about being part of the action of a family business and having the opportunity to learn from a parent how to do something challenging. Thank you to Charlie Owen and all the parents—including mine—who were good bosses, teachers and mentors.