Ralph and Shawn Feurer could be working together for another 18 years, as the senior Feurer has no early retirement plans. Shawn acknowledges that he defers to his father, but they initially disagreed when Ralph wanted to join a Certified Contractors Network peer group four years ago. Shawn says that his father tends to make impetuous decisions, and Shawn wanted more proof that CCN was worth the investment. (Both now agree that joining CCN was the best move they’ve made.)
WHO’S IN CHARGE? Shawn Feurer had some leverage because, at 25, he was given the opportunity to purchase his half of the company over a 10-year period. Equity definitely makes a difference in keeping kids in the company and in determining parents’ exit strategies. The Rodriguezes own Mr. Roofing equally, although the father isn’t involved in day-to-day operation of the business. “He’s a high-paid gofer, but he’s happy,” Carlos says, laughing.
Plans exist whereby QualiTeX, Weathertight Windows, and Swing Line Windows will each, at some point, be owned by the next generation. For example, Adam Hollander will eventually own Weathertight Windows outright, and his father might draw a salary as a consultant. Adam’s brother, who is a pilot, and his sister, who’s a dental hygienist, will benefit from a trust Merv has set up. At Swing Line Windows, Ken Moeslein intends to work until he’s 60, and suggests that Jeff might consider selling the business when he’s 50 so that he can retire early. In fact, Jeff says he’s structuring Swing Line Windows so that “it doesn’t just rely on one person,” as was the case during its first 15 years. Ken has also made clear to his younger son John — who’s working part-time while attending college — that Jeff will be the “controlling owner.”
TWO’S A CROWD Owners with more than one child face more complex succession issues, especially if the offspring are employees. Feurer lucked out because his other three children didn’t find the business to their liking. But family conflicts nearly capsized Austin, Texas-based CG&S Design-Build, a $4.7 million business that Clarence and Stella Guerrero started out of their home in 1957. Three of their five sons, who had worked in the company for nearly two decades, bought out the parents in 1996. But the father had all but anointed one brother, Billy, heir-apparent in the late 1980s. So the transition “was horrible,” partly because the father refused to butt out, recalls Dolores Davis, a sister who is CG&S’ general manager. Their mother was forced into the role of peacemaker to keep the family from unraveling. Two brothers exited — one to form his own construction company — leaving Billy, 47, the sole owner.
“There’s this idea that when you have a family business everyone gets along,” Billy Davis says. “But everyone in the family is different, and there’s a lot of old junk that can get in the way. My two sisters [who aren’t involved in the company] think I’m nuts to stay. But I love what I do.” — John Caulfield is a freelance writer and editor based in New Jersey.
MOVING ON Two brothers start their own company after their father sells the family business.
Missing the opportunity to take over the family business didn’t stop Harley and Aaron Magden from striking out on their own.
While in school and then full-time, the brothers, now 30 and 26 respectively, had worked at Cleveland-based Regency Window, which their father Mike started in 1993. But when Mike began thinking about retiring a few years back, the brothers realized it would be “impossible,” in Harley’s words, for them to raise the money needed to buy out a $20 million enterprise that does 40,000 installations annually.
Mike eventually sold to Chicago-based investors who, in November 2005, installed their own CEO, David Gordon, formerly of Armstrong World Industries. Mike retired a month later.
Gordon and the Magden sons didn’t mesh, and the sons quit in February 2006.
But Harley and Aaron wanted to stay in the home improvement field. A non-compete clause in their contract with Regency led them to relocate to Baltimore, where they opened Window Nation in July 2006. “The barriers to entry in this business are not as great,” says Harley, noting that it took only about $100,000 to get their business started.
Aaron handles sales, Harley finance and marketing, which were essentially their jobs at Regency. The one change they’ve made to their father’s business model is to use technology more. Window Nation is projected to install around 8,000 units in its first full year.
Harley says he wouldn’t press his children to come into the company unless they wanted to. “I was kind of pushed into the business because my father needed help getting started. And if [Regency] wasn’t sold and we’d stayed on, there would always be people who would say we were given the company. By starting our own business, there’s a sense of accomplishment.”