There are three life experiences that Cam Wallace thinks of as 'milestone events': getting married, the birth of his children and selling the family business.
Along with his father and uncle, Wallace was an owner of electrical engineering firm Electropar, which the trio sold to Nasdaq-listed Preformed Line Products in July 2010.
Electropar was started by Wallace's grandfather in 1950, and the family grew it to have a turnover of around $30 million at the time of its sale five years ago. But exit was a challenging process on many levels; for example, they had to juggle keeping the business humming while undertaking months of due diligence, initially with multiple parties, and making the decision to sell a third-generation business was tough.
"When you've worked in a business for 40-odd years, as my dad and his brother had, and for 15 or more as I had, letting go is really tricky. Your fundamental self-worth comes from leading the business, and the people you work with are like an extended family. You have an intense loyalty to those people."
Research shows the majority of owners of small to medium-sized New Zealand firms have no firm plans for how they might exit their operations; less than half of local SMEs reported having an exit strategy in place in the latest MYOB Business Monitor research, carried out in March this year.
James Scollay, general manager for SME solutions for MYOB, says age and business sector seem to be key factors that influence whether a business owner has an exit strategy; those closer to retirement age are more likely to have a strategy, as are those in the retail, hospitality, agricultural, professional or property services sectors.
Talk to your advisor early in the process and attend a seminar or do some reading so you have time to prepare your company - sometimes years in advance.
But Scollay says business owners need to be thinking about their exit strategies well before retirement looms.
"As part of an overall business plan, understanding what you want over the long term helps answer some crucial questions around business structure, growth and development strategies, employment and investment," he says.
In May this year Robyn de Bruin-Judge and her husband Wim sold their business de-Bruin-Judge Furniture, which produces bespoke kitchens, furniture and fit-outs.
She thinks many factors that contribute to a successful exit are simply good business practice, including establishing and documenting systems, upskilling staff, delivering strong and consistent financial performance, making sure plant and machinery function well and that the premises are tidy and presentable. Given that, she agrees it helps to get thinking early.
"Talk to your advisor early in the process and attend a seminar or do some reading so you have time to prepare your company - sometimes years in advance," she says. "That will help you get maximum value from your years of input when the opportunity or desire to move on arises."
Cam Wallace was one of three owners of Electropar, a family owned electrical engineering business, which they sold to Nasdaq-listed, US-headquartered company Preformed Line Products in July 2010. He is now director of customers and partners at business growth centre the Icehouse.
Can you tell me about Electropar, and ultimately the motivations for selling that business?
The company was started by my grandfather in 1950, then my father and his brother joined it in the early seventies, and I joined in 1995. When I joined it was a small company and we managed to grow it to quite a good, medium-sized firm with a turnover of around $30 million at the time of sale.
In early 2009 we were thinking about what we were going to do to take the company to the next level. We had a very full order book and we were thinking about how we could make sure we could keep it strong and growing. Ultimately what we thought it needed to grow and scale was exposure to a multinational business.
So then it was a question of whether we were prepared to work in the business as a part owner, or were more interested in selling it outright. When you've owned a company for a long time, sometimes becoming a part owner can be a difficult transition, so we settled on the latter. So we decided we'd put it on the market and try to find the right partner to buy it.
Was that a difficult decision, especially given it was a third-generation business?
It's like selling a child. When you've worked in a business for 40-odd years, as my dad and his brother had, and for 15 or more as I had, letting go is really tricky. Your fundamental self-worth comes from leading the business, and the people you work with are like an extended family. You have an intense loyalty to those people.
What was the process once you'd decided to sell?
We made a list of all the people globally who we thought might be interested in buying the business. Then in a closed process we approached the organisations on that list one by one. From that we ended up with a shortlist of three that had indicated an interest, and we went through a detailed due diligence process initially with three, then with two and then one.
That was a really tricky proposition because when you go through a deep due diligence process with multiple parties you're doing it on top of a normal job. You have to be careful you're not letting the numbers for the company drop as you go through that process because otherwise you devalue the business. For the better part of nine months we came to work every day of the week, starting early and finishing late, to get through everything we needed to do.
Was that the most challenging part of the process?
That was definitely a challenge. Also, once the deal is done you then have the challenge of bringing two organisations together, being considerate of one another's culture and coming up with a formula that continues to be able to make the magic.
Having 'been there and done that', what was your biggest learning from the process?
There are probably three experiences in my life that I think of as milestone events - getting married, the birth of my children and selling the business, no question. It's a life experience that only a handful of people get to have, so you learn an awful lot. That's why I'm at the Icehouse; my mission now is to use all of that experience to help other Kiwi businesses do better.
What's some key advice you'd have for other business owners considering exit planning?
You can't start early enough. And the first thing to figure out is what you're going to do after the business: when will that be and what does life look like? Once you've answered those questions you can work backwards from there to build a plan to deliver the outcome you want.