Creating a legacy of success for a new generation
I am a builder. My dad is a builder as was his dad, his dad, his dad and possibly even his dad.
My father, Wayne Brown, with plenty of help from Grandpa and Uncle Doug, started Brown Builders in 1971 and built it into one of the largest and most successful general contractors in Louisiana.
We have a reputation for quality, innovative construction for customers whose repeat business we were privileged to earn. My dad has worked hard, and today’s Brown team carries on his legacy proudly.
Growing up, my three sisters and I lived the life of children in a closely held family business. Saturday morning cartoons were often followed by a trip to check jobs with Daddy. Few family vacations didn’t include a quick detour to check in with an out-of-town superintendent or my dad leaving for just a few minutes to meet with a prospect (what a coincidence that we went to Disney World the year Brown Builders built a hotel outside of Orlando)!
From the time I could handle a stapler, my summers were spent working at the office or in the field, or even one in a furniture warehouse on a “job exchange” with the daughter of my father’s best friend’s family business.
Brown Builders was always like an older sibling who took a lot of my dad’s time, attention and nurture but who, in exchange, brought him plenty of satisfaction and gave our family a good life.
One Sunday morning in 1999, my larger-than-life grandfather, James M. Brown, simply didn’t awaken. As was typical for most family businesses of the 20th century, the company founder died and his two sons continued his work. There was no written succession plan, no management strategies for the next generation. But this was a wake up call for my forward thinking dad who knew planning would be needed for the future of Brown Builders. So he called his CPA and attorney who helped him get his wills in order, check his life insurance, create family LLC’s and work on transferring stock for the best tax advantages. All great advice, but it still left gaps.
As adults, my sisters have moved out of state and on to their own lives. I stayed in town and was honored when my dad offered to sell Brown Builders to me. I made my first purchase in 1999 and was named president in 2013.
As we have worked through this transition, we have found the succession of a family business to be much like a three-legged stool. The “legs of our stool” are wealth management, operations and management strategies a]]hh ui dd dfnd personal/psychological considerations. To keep a stable company, each leg of the stool must be strong.
On the wealth management side, the assets of the company often make up a substantial portion of the parent’s estate and an increasing portion of the child’s as the transfer progresses. Careful consideration must be given to insure that the sales price of the company fairly compensates the parent for his continuing contribution to the company’s success while not creating an undue financial hardship for the next generation.
In management and operations, first a clear and meaningful strategic plan and vision are more important than ever during a transition. Both need to represent the exciting opportunities the new generation brings to the company without deviating too far from the successful model that created a company worth passing down. Secondly, in many secondgeneration companies, the founder started small and has maintained a level of involvement in day-to-day operations that won’t be carried on by the new leader. Careful management planning is critical to carry the business on without the often strong founder.
The third leg, the personal/ psychological considerations, is often overlooked but equally critical to a successful transition. How do we fairly reward the one who has chosen the company as her career, has done the work to prepare to take it over and upon whom its future depends while still giving the others their birthright, their fair share of what their parents worked hard to build and nurture? A succession (and even a company) that doesn’t consider this can be derailed by sibling rivalry if the parents are no longer there to referee. It is important to communicate with family members included in the new structure and those who are not. Consider carefully everyone’s feelings, remember how much you love one another and lovingly address everyone’s concerns.
Balance is critical to make a succession a success. Each stool leg is equally important. Of course, you must focus on one more than another from time to time, but over the long run, if you don’t give one side the time it needs, your balance is completely off and the company and its stakeholders suffer.
With careful planning, I will be a builder who builds a strong foundation for her children to build upon one day.
Kristen Brown is the president of Brown Builders and has been continually recognized by the industry for her construction excellence.