Handing Over Your Keys Feedback
June 6, 2006
Thoughts From a Contractor on Exit Planning
Below is an e-mail I received from a contractor in response to my Exit Planning article that appeared in the January '06 issue of Contractor Magazine. Reprinted with permission. --John Zink
I enjoyed and appreciated your article in the January Contractor. Your comments suggestions were well presented and right on target.
I want to offer just a few added comments. The challenge of turning over the business has many complications. Some of these involve banking and insurance matters along with major issues in the bonding arena.
In most cases the owner(s) are personally - financially obligated should a problem develop within the company. They would have to personally cover all costs to finish a bonded work if the company is unwilling or unable to do so. Normally not all work is bonded, but obviously those jobs that are pose a real challenge to turning over the business and create major financial obligations should a problem arise.
The big risk for a remote owner is taking the step to trust the management team, who has no financial risk with their personal assets. Again, the owners have personally laid their assets on the line for the completion of the bonded work.
There are also issues of latent defects, mold and other exciting matters that carry on with the new company owners for 7 to 10 years. Many of these liabilities are ones that you cannot purchase insurance for. If you retain the same company name, you also cannot structure the current contract language to limit the liability for future owners.
Thus, finding someone who wants the risk, financial responsibility, potential for carry forward of unfunded union pension obligations (for union contractors) and all the other potential issues an owners faces represents a real challenge.
Many individuals like the idea of being an owner, but not many are willing to take on the risk or work to assume that role. I have seen many a would be owner or transfers not happen when a full awareness of all the ramifications are understood.
I can also say that with the current and coming storage of talent I would welcome a person of experience who was technically retired, but could work part time. This would be at any level - office or field. That part time approach is part of our plan. We enjoy our work, but we also want to follow other paths.
Part of our transition includes your suggestion of being away more. However, thank goodness for e-mail and the mobile phones.
I would offer some wisdom from my grandfather some 35 year ago that is becoming more vivid. He offered the advice "Have something to retire to." We all like to feel we are contributing and needed.
Thanks again, blessings, joy and in His love,
Commercial Design Engineering
You can learn more about Exit Planning at the Foundation's Owners Strategic Management Workshop, March 29 to April 1st in Scottsdale, Arizona. Call John Zink at (800) 533-7694 or click this Link for more information.
(c) 2005 PHCC Educational Foundation
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