When the founder of Paradise Island Foods George Thomson was thinking about passing on the torch, he had no intention of just handing the company over to his two sons Len and Kevin. Instead, he asked them to first prove that they would be assets to the business.
"He wanted us to gain hands-on experience in the food industry and learn how to work for other people too," recalls Len Thomson, now President of the Nanaimo, B.C.-based company, which manufactures and distributes quality cheese, cheese alternatives and other wholesale food products.
"My father is a businessman and he was doing what was good for the business," explains Thomson, who runs the firm with his brother Kevin, Vice President, Operations. After learning the ropes in grocery retailing in other companies and then moving up the ladder at Paradise Island Foods, he and his brother finally took over their father's enterprise in 2003, which marked the company's 25th anniversary. Today, they've proven themselves highly capable as owners. "We both bring different strengths to the table. I'm a natural for sales development while my brother is more focussed on the production side of business. We challenge each other and that's important to help your company evolve."
Making the deal
To help them through the business ownership transition, Len Thomson says the company worked closely with a chartered accountant and lawyer to structure the succession plan. "We also made the transition over a three year period, so we could reach our comfort level first and make adjustments," he says.
"One of the more complex matters is tax planning, so we got the experts working on that," adds Thomson. BDC Consulting can also provide entrepreneurs invaluable expertise regarding transition planning, including developing and implementing a sound plan, evaluating financial resources, identifying goals, management coaching and resolving conflicts. In general, a business can benefit from a third-party point of view.
Get the right financing
As well, Thomson went to BDC to finance a part of the acquisition with a term loan. "We had borrowed from BDC for our new building, so it was a natural step for us," he says. "That money gave us a lump sum for payment to our father and then we were also able to negotiate an accessible payment plan with him," he adds.
For entrepreneurs looking for financing, BDC can also provide solutions that fit their exact needs, whether it's a term loan secured by fixed assets or an unsecured loan. Other specialized solutions such as subordinate financing are also available to businesses that may be actively growing but lack the secured assets required by conventional lenders.
Communication is key
Another key factor in the success of the ownership transition, says Thomson, was communicating effectively to customers, suppliers and employees in advance. "You don't want surprises for your employees. We spoke to our senior management team six months in advance so everybody would be prepared," he stresses. "For us, communicating to customers and suppliers was crucial because my father had built a strong rapport with them. We wanted to be sure that his departure wasn't viewed as something negative."
Clearly the new owners have seen highly positive results since taking over. "We're achieving steady growth, so we're definitely headed in the right direction," he says. Although some founders like to keep their finger in the pie, Thomson says his father decided to no longer be involved in the company. "He's happily retired in Arizona and taking advantage of his succession plan," he concludes.
