Gifting the Next Generation
for Jim LeFaivre, 55, there was never any question as to who would take over J.R. LeFaivre Construction Co.: It would be his son, Matt, 27. Matt proved himself a worthy partner over the past seven years, doubling sales from $900,000 to $1.8 million.
Jim LeFaivre invested well for his own retirement, putting money into mutual funds and real estate, without hurting the business. "I don't want Matt burdened with paying me whatever the business would be worth on top of trying to make the business go," LeFaivre says.
The father and son have started transferring responsibilities. This past year Matt's taken over managing employees, as well as job scheduling. His father lets him make mistakes and discover new systems along the way. "He lets me go at my own pace," Matt says. "If you plan early enough, you can take time to learn the correct way to run a business."
Jim works fewer days each week and lets his son assume the leadership role. (Jim LeFaivre's.will legally stipulates that Matt gets the business, should misfortune intervene with their plans.)
They've hired a production manager, but Matt has managed some jobs, so he knows when one is produced correctly. They've also avoided the thorny issue of employees not respecting the next generation:
Matt helped hire the employees who have joined the company over the past seven years and has made key personnel decisions.
Jim says as his responsibilities decrease and his son's increase, their salaries will be adjusted. The final transfer will be the financial workings of the business.
When the transition is complete, they'll draft legal papers. Jim has promised Matt he'll be his consultant for life, a call away. But he may have trained his son so well that the phone never rings.