bcbusiness.ca sePTeMbeR 2015 BCBusiness 43
Although nature's Path Foods has grown through acquisition,
arran and Ratana stephens want the world to know: the company
itself is not for sale. The founders of north america's biggest organic
breakfast and snack food maker post this message on the company
website: "arran and Ratana built this family company from the
fertile, organic ground up. We haven't 'sold out'–and we don't intend
to." undaunted, prospective buyers still send arran about one pitch per
week and return every six months for a fresh rejection.
arran stephens is 71 and has been making plans to leave the
30-year-old Richmond company for about 15 years. He and Ratana
still come to the office for a few hours every day, but three of their
four children work for the company and have taken over much of the
responsibility for running things on a day-to-day basis. stephens says
the children found their roles in the company through natural selec-
tion, based on their skills and passions. "We held them to a higher
standard than others and expect them to work harder and more stra-
tegically," he says. "There is no room for nepotism."
The couple owns all the shares in the company and plan to pass them
to their children. "When we go, at some point, it will go equally to the
children, because we don't want fights after we're gone," stephens says.
Their succession plan is strikingly elegant compared to the squab-
bles and lawsuits that commonly plague other family-run businesses.
some founders' children fight because they are left with a smaller share
of equity or an outsized responsibility within the company.
entrepreneurs are good at planning how to get into business–but not
about getting out. succession is simply not something many entrepre-
neurs map out, says Michelle Osry, who leads Deloitte canada's Fam-
ily enterprise consulting division in Vancouver. Family dynamics can get
crossed with financial decisions, creating conflict among family members.
sometimes the discussions are so tough, they don't happen at all. "Only
20 per cent of families successfully transition the business to the second
generation–either because the family does not stay intact or the business
and the wealth does not stay intact."
There are numerous options on the table for business founders
planning to get out. some, like the stephenses, know their children
will be faithful stewards of their company. but other founders' chil-
dren may lack the desire or the skills to take over. in those cases, the
family could hire professional managers to run the business for them.
Or they could sell some or all of the equity to other interested buyers,
including company managers or employees, a competing company or
a private equity firm. as arran stephens can attest, there is ample
liquidity among private equity firms hunting for investment vehicles.
but to work out which option is best, families need to open
discussion. There is help available for those who seek it. stephens
works with the business Families centre at
ubc's sauder school
of business and highly recommends family business owners seek
its advice. –D.H.
Succeeding
Through Succession
For those business owners for
whom "selling out" is not an option,
a good succession plan is critical
