FAMILY BUSINESS SUCCESSION

What do you do if you cannot find a successor or a buyer for your family business? Sell to your skilled and experienced workforce! “It’s an answer you may have been looking for.”

57% of family businesses have acknowledged that they would have no choice but to cease trading within one year of a severe illness or death of a current owner.

Only 42% have planned for the family business succession.

Family Business Succession Options

Model 1. “Recycling dad” but what if no one is willing or able to step into dad’s shoes?

Model 2. Next Generation ownership and management

Model 3. Have active next-generation owners with a non-family management team

Model 4. Trade Sale or find a private equity investor

Model 5. Management Buyout – Then the question arises; Can the business then sustain another MBO when the managers/owners are ready to retire?

Model 6. Employee Ownership

                6a. Create some liquidy with a minority employee ownership stake. This unlocks … Read more

INTERVIEW WITH DR. ANTHONY JENSEN, CO-AUTHOR OF “WAKING THE ASIAN PACIFIC COOPERATIVE POTENTIAL”

This interview was released by The International Cooperative Alliance Asia Pacific and has C-Mac Industries (an Australian workers Cooperative) as a case study.

Dr. Jensen is the lead editor and key author of the book “Waking the Asian Pacific Cooperative Potential”. He is also the Founder of the Asia Pacific Cooperative Research Partnership, with Prof. Kurimoto.

Q 1. What was the genesis of the book?

This project had its genesis in collaborative thinking around the idea of comparative research. An idea whose time had come. It started with discussions I had held with Mr Bien Nito at the University of Asia Pacific on a comparative study of cooperatives I had conducted in Italy and Australia, and how this could be applied to Asia-Pacific. Ms Melina Morrison of the Business Council of Cooperatives and Mutuals (BCCM) in Australia suggested that I put this to the ICA-AP Research Committee in Bali in 2015, where it struck a deep chord with Professor Akira … Read more

HOW IS YOUR EMPLOYEE-OWNED COOPERATIVE PERFORMING?

Mutual Value Measurement or Cooperative Value measurement is a recently developed method funded by BCCM and Monash Business School

As values-based businesses, the greatest challenge for co-operatives and mutuals is to let our values shine. This is a new way of measuring our positive impact on our members, our customers, the community and the economy.

There is a toolkit for measuring the value we create. A framework that helps the CME sector measure their total value creation (mutual value) through a set of common dimensions. Creating a commonly shared language about measuring and reporting mutual value.

The MVM Framework can be used by CMEs across different industries, of different sizes, and with different capabilities.

The Framework uses six dimensions to cover the unique areas of value that CMEs generate.

  1. Commerciality

Generation of sustainable economic value for current and future members through business cooperation

  1. Shaping Markets

Creating, maintaining and/or shaping sustainability and competitive markets for goods and services

  1. Member relationships

Building … Read more

WHY ARE THERE NOT MORE EMPLOYEE-OWNED BUSINESSES IN AUSTRALIA

After attending many business functions, seminars and conferences, I have found that business owners in Australia are unfamiliar with employee ownership. Even my accountant initially advised not to proceed with an employee-owned cooperative, due perhaps to a combination of inexperience and a warped perception that cooperatives were too tricky and complicated. He later told me “cooperatives were in his toolbox under dairy farmers”.
Our C-Mac experience has shown that:

  • The owner rarely thinks of selling to all the employees
  • Owners don’t consider that employee ownership represents another succession option
  • The owner does not consider that management and employees possess the requisite skills to run the business
  • Owners are concerned about losing control of their company
  • Accountants do not understand employee-owned companies
  • Most economists and professionals have limited knowledge or understanding of the benefits of employee ownership and don’t consider them as serious alternatives to conventional corporate structures
  • Management Buy-outs often receive priority consideration
    • Management is in the driver’s seat with
Read more

SEVEN PRINCIPLES OF COOPERATIVES AT C-MAC

The seven cooperative principles are a vital part of any cooperative.  In an employee-owned cooperative, these principles have to be understood and accepted.  This is a big difference between employee-owned cooperatives and other employee ownership models.

C-Mac’s Board, management team and Staff Committee’s response to the Seven Principles of Cooperatives and values has been slow.  Although they did not have prior understanding of these Principles, it was essential that when exposed to them, they would accept them as a reflection of their own personal values.  Most of the members, after two years still need to sense merit in the Principles.  Over time as members become more exposed to the cooperative principles and values, I am hoping they will come to view them as an operational foundation in all areas of the business.

Cooperatives are based on the values of self-help, self-responsibility, democracy, equality, equity, and solidarity.  In the tradition of their founders, cooperative members believe in the ethical values of … Read more

HOW DO OWNERS UNLOCK VALUE IN THEIR COMPANIES?

One year after establishing our employee owned cooperative, the economy started to improve.  Before this, a significant rationalisation had occurred throughout Australian manufacturing.  Companies either re-invented themselves or closed their doors, but even as economic conditions looked brighter, profit margins were still very tight. 

Trying to value a business that had taken the better part of two generations to create and build was a challenge.  As business owners, we were overly influenced by our personal histories, our sacrifices and the memories that had taken over half a century to accumulate.  We had initially hoped that placing the business for sale on the open market would automatically produce a fair and equitable result for both buyer and seller.  Unfortunately, this was not the case; we found to our horror that no one wanted to buy!

In the absence of a sale, our protracted and tortuous succession process had finally come to a conclusion.  We had transferred full ownership to our employees … Read more