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Key Idea: Give It Away (2)

Rather than writing herself a big, fat check and walking away from Ebby Halliday Real Estate Company, Ebby decided to give 49% of the company to her employees.  More...    Home...   Related...   Ebby's episode...

Key Question:


Give them your business.  Rather than writing herself a big, fat check and walking away from Ebby Halliday Real Estate Company, Ebby decided to give 49% of the company to its employees.

Q: What will happen to Ebby's business after Ebby?

A: Of course, this company will go on and on. She said that the many long-term employees deserved to reap rewards because she could not have built the company without them. This overt, generous gesture places the company on strong psychological footing.

While she is healthy enough to pass the business on and praise the leadership, they know she is confident they will succeed without her.

Most companies die with their founder or they die when the founder decides to quit working. Some would throw these types of companies into a category called "lifestyle companies." In other words, the company was a vehicle for the founder to live a certain kind of life. We disagree.

Most small businesses would-could-and-should have a life separate and apart from the founder. If the founder would first learn to trust, it opens the way so the founder could find people in which to place that trust. And the business, with all its customers, suppliers, and employees, should continue to perfect relations, systems, and their contributions to their community and world. Mary Frances was groomed at Ebby's side for over thirty years plus Mary Frances has worked to refine herself into a smart and sophisticated leader.

When you plan to pass the business on to the next generation of leaders remember:

Don't Just Hand over the Keys. Each successor should be carefully groomed to take over the reins. This is critical to ensure a smooth transition.

Respect the Heir. No one will make the same decisions that you would have made and choose the same path that you would have chosen. Don't hamstring the legacy by expecting to clone yourself.

Keep Disagreements Private. The keys to the Executive Washroom are best passed over gradually and there will be disagreements during the transitional period. Neither employees nor customers should be aware of even the remotest hint of conflict. Conflict is natural and healthy as the legacy is implemented but is best kept private to ensure that its significance is not overstated.

Think about it

What keeps you from passing the torch? Do you have someone you are training that can move into your place soon? Are you nervous that if you pass the torch, you won't have anything to do? Do you think your life might feel empty if you don't have to be in the office everyday? If your exit strategy includes an established legacy, do you have a legacy plan and a timeline for its execution?

Clip from: From Equity to Exit Strategies - 8 Possible Paths

The world:  Most of us small business owners do OK competing with the big businesses in our industries or we don't survive. But when it comes to our exit strategy and succession planning, most of us fall on our face.

This episode is to explore business valuation and exit strategies.

An exit strategy is just like doing a will, but here you try to maximize the dollars you get out of your life's work.   Nobody wants to see you liquidate. That's getting pennies on your dollars. Tangible assets get sold (fire sales) and the intangibles are lost forever. Liquidation is the worst kind of liquidity.  

Most of us will sell our business through merger or acquisition. But, if we get much over two-to-three times sales or six times earnings, we all think we've done very well. Yet, when big business sells, they usually begin at six times earnings. Then we see 40 times and even 300 times earnings on the open markets. Why should we be satisfied with so little?

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We all must prepare today for the invevitable tomorrows.

Small Business Owners Everywhere in the world, We all will exit our business someday.

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Give It Away (2)

HATTIE: Number two. Give it away. Transfer ownership to people in the family or a key employee. It happens all the time.

LEONORE BERGERT (Accounting Department Supervisor): She's the world's greatest salesperson.

ROBERT DOYNA (Halliday employee): She's a legend in her own time.

HATTIE: (Voiceover) Who is she? She's Ebby Halliday, but everyone in Dallas already knows that.

Unidentified Photographer: (From ceremony) OK, show us your award and be proud.

HATTIE: (Voiceover) Since 1945 she's been selling people in Dallas houses, and she's still in the office every day. This may be the largest privately held real estate company in the country, reaching its all-time best this year by moving 17,500 families into homes and ringing up over $3 billion in sales.

HATTIE: And I just read that you've given 49 percent of your stock to the employees. Why would anybody do that? I mean, why don't you just take a big fat check from some outside investor and walk away?

EBBY: I didn't want to do that. I felt an obligation to the people who have helped build this business.

HATTIE: You'd wrestled with this decision, and it was clear to you that it was the employees who built this business.

EBBY: Well, there was never any doubt that I didn't want anybody else to have our business.


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