Case Study of a Succession Plan

Jackson, Kirk
July 2005
Journal of Financial Planning;Jul2005, Vol. 18 Issue 7, p39
Academic Journal
This article relates the experiences of the author in succession planning. My father bought Jackson & Blanc (J&B), a well-known heating and air conditioning company in San Diego, California, from his father, and operated it for many years. I worked in the business part time during high school and summers. After attending San Diego State University, I learned the business from the inside out, working in what was then the fledgling energy management industry. Years passed and I was promoted to general manager of the service business. One day I attended a lunch meeting with the then vice-president of our company and a gentleman from Los Angeles, California whom I had never met before. It turned out that this gentleman ran a large mechanical contracting firm in Los Angeles, but I still could not figure out why we were meeting. I asked why he came to see us. You do not know? he said, he was there to buy J&B. I blurted out, over my dead body. Lunch ended pretty quickly after that. I returned to work and stormed into the office of my father. I told him I was grateful for the opportunities I had been given in the business, but that I had worked hard for those opportunities. I told my father he owed me only one thing, if he ever contemplates selling this business, I want a shot at running it first. By 1993 I was running J&B. But I saw a problem, the equity I was creating was not being built for my family and me, so I began to make noises about buying the company. I told my father I needed to have equity in a business and control my own destiny and that I was either going to do it at J&B or leave, buy another business, and start over. The method we all settled on was an installment sale, which was how my father had bought the business from his father. We included a kicker saying that if I flipped the business within three years of the sale. Dad would be compensated for that.


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