Michael Plummer Sr. founded Our Town America Company in the year 1972 in Florida. Michael Plummer Jr. took over the management of the company after the death of his father. The company had thirty employees. Although, Plummer had worked in the business with his father for nine years, he never shared his father’s enthusiasm for the family business. While seated on his father’s desk, Plummer Jr. reflected the way he missed his prior experience while working as an army medic.
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After the death of his father, Plummer Jr. thought it was the ideal time to sell the family business. After selling the family business, Plummer would consider going back to the career he loved. Selling the company was a very difficult decision for Plummer because Our Town America represented his father’s legacy. Additionally, the company had employed Plummer’s aunt, sister, and cousin. Plummer was in South Korea when his father survived a heart attack. Plummer later returned to Florida, where his father began grooming him to take over the family business.
Plummer Jr. saw the family business as a diversion from his passion of being a medic. Plummer wondered whether selling the family business was the best option after some family members had started quarreling over the direction and ownership of the company. Longtime employees were worried about the security of their jobs, and they began asking Plummer numerous questions. Plummer was unsure about the survival of the company after it had suffered a 24 percent decline in sales after the recession. The company was already in financial problems. Plummer faced the challenging decision on whether to retain and run the business or rather to sell the business and share its proceeds with his sisters.
Outline the various exit strategies that Michael Plummer faces if he decides to sell the business.
- Selling to employees or partners – These are persons who have been with the business during both good times and hard times. These people may already have a stake in seeing that the business survives. For instance, Plummer can consider selling the business to the longest serving employees of Our Town America such as the national sales manager in case they were interested to buy the business.
- Selling to a third party – They comprise of strategic and financial buyers. One needs to protect the business, from strategic losses and other management distractions that may affect on the company’s value.
- The acquisition – This involves the finding of another business that wants to buy your business and sell it to them. For example, Plummer should find a firm interested in acquiring Our Town America and then consider selling the family business to them.
- Open market selling – This involves the selling of the business on the open market.
If Plummer decides to sell the family business, what steps should he take to prepare the company for sale and maximize its value
- Maintain well-made financial statements and strong assets that will attract potential buyers. For instance, Plummer must ensure that the company’s statements are well prepared and audited.
- Retain the current management in the business because they can convince the potential buyers to buy the company.
- Safeguard the business proprietary information that may affect the business value if exposed to the public.
- Protect the company against lawsuits arising from misrepresentation or alleged fraud. Ligations issues may increase the costs of potential takeover, thereby affecting on the company’s value.
- Protect the business against strategic losses and management distractions while preparing to sell the business in order to maximize its market value, since such costs may affect on the firm’s value.
Do you think that Michael Plummer Sr. adequately prepared his son to take over the family business? What steps should an entrepreneur take to groom his or her successor?
Plummer Sr. did not prepare his son adequately to take over the family business because he forced him into running the company and did not allow him to make his choices.
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- One needs to list the traits of the perfect successor. For example, one can list the characteristics associated with the roles of the job.
- Look for and single out the right candidate
- Discuss the opportunity with the candidate and commit yourself on how to explore it.
- Groom the candidate through coaching, training and use of mentorship programs.
- Assess the actual ability of the candidate by assigning them genuine tasks to perform.
- Give the ideal candidate the job after demonstrating their ability.
- Unleash the candidate and let him or her perform the job.
Assume the role of adviser to Michael Plummer. What actions do you recommend he take concerning the future of the family business? Explain.
As an adviser, I will advise Plummer to hire a professional manager to run the business because the company currently has issues concerning its direction and ownership. Thus, the professional manager will be able to sort out the issues impeding on the business. Additionally, the manager will be able to work for the best interest of the stakeholders, thereby minimizing conflicts of interest that exist in family businesses.
My opinion regarding the case is for Plummer to follow his passion and allow a professional manager to help in running the family business. There is no available epilogue for the case. To groom a successor to take over the management of a family business is quite essential. The use of coaching, training and mentorship programs is critical to the success of the grooming process.