36 minute read
THE INTERVIEW: SHARAD CHADHA, SPRECHER BREWING’S NEW CEO
the Interview
Sprecher Brewing Co. Inc. announced recently that its founder and owner Randy Sprecher has sold the business to a local investment group. The group that purchased the company is led by SHARAD CHADHA, a former executive at GE Healthcare, Samsung Electronics, ABB and Electrolux.
Chadha and his business partners, some of whom are members of Wauwatosa-based angel investment group Silicon Pastures, have ambitious plans for growing Sprecher, including a larger distribution footprint, new products and an additional local location in a highly-visible area. BizTimes reporter Brandon Anderegg recently spoke with Chadha about his background and plans for the business.
What drove you to purchase Sprecher Brewing?
“I’ve always dabbled in entrepreneurial ventures as an angel investor and otherwise. I’m originally from India and my great grandfather had a soda bottling plant, distribution and retail in British India. This was in the early 1900s. He died before I was born, but I had always heard stories about this Banta bottle. That’s just the style of bottle. It’s a little marble on the top and you push it down and the gas comes and you can drink it. It’s a pretty cool looking bottle. All glass. My father was in the military and I never did any of that. I was an executive at different companies but always dabbled in angel investing and entrepreneurial little things. This is the greatest opportunity. It’s like an American dream coming true. This is my American dream coming true.”
How did the deal come together with Randy Sprecher?
“I’ve known Randy for about 12 years now. I was going back and forth from New Jersey working for Samsung, and this was back in June. We just chatted when I was visiting here and he said, ‘I’m ready to retire.’ I said, ‘I’m going to help buy it, put a deal together with investors. I’m going to put everything I’ve got, all my savings, mortgage my house to buy the company.’ That’s how it happened. I’ve been working on it for the last eight months.”
How do you plan to grow the company in such a competitive industry?
“In all honesty, our beer sales are not growing because the craft beer industry is tough. But our mainstay (includes) our soda, which continues to grow. Our root beer, our craft soda, our new water and hard seltzer – those are categories that are growing extremely fast.”
How will you help the company evolve?
“(Sprecher Brewing has) not focused as much on sales and marketing and I think that’s where (the new ownership group) can help. Myself and the leadership team and some of the board members, with our experience, we’re going to focus on marketing, sales and national distribution. Play with our distributors and be good with our retail partners and not just believe in the old mantra, ‘if you build it, they’ll come.’ Of course, that happens, it’s a good product, but you gotta sell it too. It’s available, but we’re not actively pursuing and selling.”
Where do you see the business five or 10 years from now?
“We’ve got to be much, much bigger than we are today. We’ve got to be nationally distributed and sold and recognized as a craft beverage. But our roots are always going to be premium craft, local, good quality ingredients. But we want to be national, if not international. We’re going to try to go international as well.” n
JAKE HILL PHOTOGRAPHY
Sharad Chadha
Chief executive officer, Sprecher Brewing Co. 701 W. Glendale Ave., Milwaukee Employees: 60 sprecherbrewery.com
Central Standard Craft Distillery plans to open a tasting room and event venue at 320 E. Clybourn St., across the street from the under-construction Huron Building at 511 N. Broadway.
Clybourn coming alive
By Alex Zank, staff writer
FOR YEARS, Clybourn Street has been one of downtown Milwaukee’s most forgettable streets, dominated by surface parking lots and parking structures.
But its reputation is changing due to a handful of high-profile developments happening near or along the street that sits in the shadow of the I-794 freeway.
In January, Milwaukee-based Central Standard Craft Distillery announced plans to redevelop the former Wisconsin Leather Co. building at 320 E. Clybourn St. Plans for the building include a first-floor tasting room and welcome center, distillation and production space in the basement, a second-floor private event venue, third-floor office space and outdoor rooftop area with views of Lake Michigan.
“We’re very excited about this next chapter for our business,” said Evan Hughes, Central Standard co-founder.
The Central Standard development joins a growing list of recently completed projects, under construction or planned along Clybourn Street. Just across the street, at 511 N. Broadway, is the Huron Building being developed by developer J. Jeffers & Co. One block north, developer Charles Bailey is working to convert the building at 600 N. Broadway into his second Kinn MKE Guesthouse boutique hotel.
At the northwest corner of Clybourn and Jefferson streets is a two-building, three-hotel development set to open later this year. Even farther east is the site of the planned Couture high-rise at the northwest corner of Clybourn Street and Lincoln Memorial Drive. To the west is the Cambria
WHO REALLY OWNS IT: SMOKE SHACK BUILDING IN MILWAUKEE’S HISTORIC THIRD WARD
Sandwiched between two tall brick buildings on Milwaukee Street in the Historic Third Ward is a small tavern-style building, a bit unusual for a neighborhood filled with redeveloped former warehouses.
Milwaukee developer Robert Joseph bought the building in 2010, thinking it would make for an interesting restaurant or office spot. Working with Hospitality Democracy and Flux Design, he completely gutted and rebuilt it in part using reclaimed materials from an old barn – a contribution from one of Flux’s owners. Hospitality Democracy now operates the Smoke Shack there.
“It was a lot of fun to be a part of that project because it was so tastefully done,” Joseph said.
But the best part about owning the building? “The baby back ribs,” he said.
Hotel, which opened in August 2019 at 503 N. Plankinton Ave.
But not long ago there wasn’t much happening on Clybourn, Hughes said.
“It was kind of like a street-level freeway; people were really using it like an access road,” he said. People are now starting to pay more attention to the street. Hughes said the Huron Building, the Kinn and the three-hotel development will draw the very type of people Central Standard is targeting with its project. This includes guests staying overnight in downtown as well as professionals looking for a watering hole post-work.
“We’re smack dab in the middle of tourism, and we’re proud of that,” Hughes said.
Clybourn Street hadn’t always been an under-utilized downtown corridor.
Rocky Marcoux, commissioner of Milwaukee’s Department of City Development, said the street had at one point been near the epicenter of downtown Milwaukee commerce. Before the rise of the railroads when grain was mostly transported by boat, Milwaukee was the grain trading capital of the U.S., if not the world, he said. And much of Milwaukee’s businesses were in the area around the Mackie and Mitchell buildings, near the intersection of Michigan Street and Broadway.
“That was the center of the central business district,” he said. The center of commercial activity eventually moved northward around the 1950s and ’60s, as new office buildings went up along Water Street.
And the installation of I-794 only made matters worse by disconnecting Clybourn from the Historic Third Ward, he said.
For Clybourn’s turnaround, Marcoux credited a few things.
He said architect David Uihlein led the charge in redeveloping the former central business district area after moving his firm into the McGeoch Building at 322 E. Michigan St. Now called Uihlein/Wilson – Ramlow/Stein Architects, the firm still remains there today. Marcoux also points to Jeffers’ projects, which include the renovation of the Mackie and Mitchell buildings and construction of the Huron Building. Marcoux said law firm Husch Blackwell’s decision to move its Milwaukee office to the Huron Building gave both the project and that particular part of downtown “tremendous credibility.” Then there was the reconfiguration of the Lake Interchange freeway ramps at Lincoln Memorial Drive as part of the Lakefront Gateway project. Before that, the view looking eastbound on Clybourn consisted of a berm, a snow fence and trash that piled up on the snow fence, said Marcoux. Only the roof of Discovery World, just a block over, was visible.
“We’ve now turned Clybourn from a back alley to a boulevard,” he said.
Marcoux predicted good things are ahead for Clybourn. He expressed confidence in the Couture project eventually moving forward, which would include a transit center for both the city’s lakefront line extension of The Hop streetcar as well as Milwaukee County’s planned bus rapid-transit service. Then there’s the rare development opportunity presented in the Lakefront Gateway site, a stateowned parcel that was freed up following the ramp reconfiguration work. Marcoux said nothing short of a high-rise should go there. Marcoux added he expects development in the area to continue, particularly along Clybourn as well as the northeast side of the Third Ward. n
ALEX ZANK Reporter P / 414-336-7116 E / alex.zank@biztimes.com T / @AlexZank
FEATURED DEAL De Pere-based grocery store operator Festival Foods recently purchased the former Target store building at 4777 S. 27th St., Greenfield.
According to state records, an affiliate of Festival acquired the vacant 130,000-square-foot building from Target Corp. in late January for $4 million. Festival purchased the 21.9-acre site for well under its assessed value of $7.1 million.
Representatives of Festival did not return calls seeking comment on the transaction.
The building was constructed in 1970. Target closed its store there about a year ago along with five other under-performing stores across the U.S.
Festival Foods, meanwhile, entered the Milwaukee market in November when it opened a new location in Hales Corners. That 67,000-square-foot store was built on the site of a former Kmart store. FESTIVAL FOODS BUYS FORMER GREENFIELD TARGET
ADDRESS: 4777 S. 27th St. BUYER: MKB Greenfield LLC SELLER: Target Corp. PRICE: $4 million
Advertise in these upcoming special reports and get your message in front of area business executives.
M&A: Big Deals
Higher Education & Research March 30, 2020 Space Reservation: March 13, 2020
Contact Linda Crawford today! Phone: 414.336.7112 Email: advertise@biztimes.com
Liz Uihlein…on running a $5.8 billion family business
BY ARTHUR THOMAS, staff writer
JAKE HILL PHOTOGRAPHY
Every family member in a family business comes with their own personality, strengths and skills that help a company grow. Pleasant Prairie-based packaging distributor and supplier Uline is no different. “It turns out – I didn’t know it – I’m a merchant. I love product,” said Liz Uihlein, president and chief executive officer of the company. “It’s weird to develop a love of corrugated boxes and shipping supplies, but I really enjoy (it). It’s very exciting to get a product, write the copy, put it in 11 locations in North America, and so I really like the creative part.”
Uihlein said brother-in-law Steve Uihlein, a company vice president, brings finance expertise to the business, while Dick, her husband and the company chairman, is the one with big picture vision who suggests new areas or markets for the company. Phil Hunt, executive vice president at Uline, described Dick as “the pusher, the driver to keep us growing and moving forward.”
“‘You should be here, you should be there,’ but he wouldn’t do the work,” Liz Uihlein said during an interview in her office. “We did the work, but on our own we wouldn’t have done a lot because we are little busy bee workers and we’re happy where we are.”
Uline has been doing a lot of growing in the 10 years since the company moved its headquarters from Waukegan to Pleasant Prairie in 2010. Back then, the company had 2,400 employees across North America.
The company’s 2010 move started with a 1-million-square-foot warehouse and a 275,000-squarefoot corporate headquarters office building. In 2014, Uline announced it would double the size of the Pleasant Prairie headquarters, adding a second, similar-sized corporate office building and another 1 million-square warehouse. In 2017, Uline added an 800,000-square-foot distribution facility in Kenosha and completed a second facility of the same size on the Kenosha campus in late 2019.
As far as corporate relocations go, the Uline story is a massive success. Wisconsin Economic Development Corp. records credit the company with $147 million of investment and more than double the amount of planned job creation.
Then in late 2019, Uline announced plans for two more new buildings, a nearly 1.1-million-square-foot warehouse facility and a 643,800-square-foot fulfillment facility at the Kenosha campus, a $130 million investment.
The latest expansion plans would take the company to more than 2,400 employees in Kenosha County alone. By the end of 2019, the company had nearly 6,700 employees across North America and $5.8 billion in revenue.
THE FIRST DOMINO
The LakeView Corporate Park in Pleasant Prairie had been developed for years by the time Uline came to Wisconsin, and the company wasn’t the first to make the jump across the border from Illinois. That said, Uline’s decision to pick Pleasant Prairie was an inflection point for development along the I-94 corridor.
“That was really one of the first dominos that led to what we’re now seeing, which is a filling in of the corridor between Milwaukee and the Illinois state line,” said Jim Paetsch, vice president for corporate relocation, expansion and attraction at Milwaukee 7. Paetsch and M7, a regional economic development organization, didn’t work on the deal to bring Uline to Wisconsin, but their corporate attraction work has benefited from the company’s decision.
“It really has helped us in terms of credibility and it has gotten us into some discussions that maybe we wouldn’t have been in,” he said.
The company’s initial investment helped open eyes to the region, but the continued investment is what has helped convince other companies that they can capitalize on the assets of southeastern Wisconsin.
“It speaks very loudly to a prospect,” Paetsch said of Uline’s investments.
Had Uline stopped growing after its initial investment, the project still would be a major win for Pleasant Prairie and Kenosha County, said Todd Battle, president of the Kenosha Area Business Alliance. “They’ve far exceeded anyone’s reasonable expectations,” he said.
Since 2010, Kenosha County’s job growth – up more than 33% – has nearly tripled the pace of Wisconsin as a whole while the growth in business establishments has been more than 1.5 times the statewide pace, according to U.S. Bureau of Labor Statistics data. During that time, Kenosha County wage growth has been slightly stronger than the state as a whole.
Uline’s growth alone doesn’t account for Kenosha County’s gains, but Battle said the company
22 / BizTimes Milwaukee FEBRUARY 17, 2020 JON ELLIOTT OF MKE DRONES LLC
JON ELLIOTT OF MKE DRONES LLC
Uline’s corporate headquarters campus in Pleasant Prairie.
Uline’s Kenosha campus.
Steve Uihlein, vice president; Duke Uihlein, vice president; Dick Uihlein, chairman; Liz Uihlein, president and CEO; Freddy Goldenberg, corporate planning manager; Brian Uihlein, vice president of merchandising.
has been an advocate for doing business in Wisconsin. Uline executives have met with business leaders considering projects in the county and its human resources employees have met with businesses considering relocation to talk about hiring and employee retention in the area.
“They’ve been really willing to help the community in terms of telling the story,” Battle said.
CUSTOMER SERVICE FOCUS
While the right mix of family dynamics can help a company grow, three people – or six if you include the second generation – do not alone help a company grow like Uline has in the past decade, especially not at any larger scale.
Uline’s business generally follows the economy, so the prolonged expansion of the past decade certainly helped the company grow. Uihlein said there isn’t any particular region that’s been bad for business, although she noted growth has recently been slower at the company’s branch serving southern Mexico.
She also said growth was strong across all of 2018, extending into early 2019 before slowing down. “In some respects, it was better because everybody was just gasping to hire people,” Uihlein said of the slowdown.
Economy aside, the company’s calling card is its customer service and next-day shipping when orders come in before 6 p.m. As Hunt put it, the idea is to “answer the phone faster than 911, have the inventory, ship the order out, get today’s work done today.”
Combining next-day shipping with a nearly 800-page catalog of products that includes more
than 1,600 stock sizes of boxes and thousands of other products creates a challenge: having any of those products available and ready to ship to customers across North America.
“We get those orders from out of the blue … for some obscure things; you just can’t believe. ‘I need 200 traffic barriers.’ You know, it’s just, it’s crazy fun,” Uihlein said. “And sometimes we’re scrambling with as much inventory as we have, but you just never know who’s going to order and what they need.”
Being a private company helps since Uline can hold more inventory without having to answer to Wall Street. Having 11 branches spread across the U.S., Mexico and Canada also makes it easier to get products to customers quickly.
The Uline operations in Pleasant Prairie, located off Highway 165 and across the interstate from the Pleasant Prairie Premium Outlets, serve primarily as company headquarters and as a distribution center to stock the branches. The buildings located a few miles north in Kenosha and across I-94 from the Amazon facilities serve as the company’s Chicago branch, supplying customers across parts of Wisconsin, Illinois, Missouri, Indiana, Michigan, Ohio and Kentucky.
Ask Uihlein and Hunt about the size and scale of the company’s growth and they say their focus is elsewhere.
“You know what, I don’t ever think about it. It’s almost like bad luck, I don’t get up that way thinking about that,” she said, adding she’s more focused on what she needs to accomplish on a given day. “I’m not a visionary.”
Hunt added that he doesn’t really make it a point to check on Uline’s sales numbers on a daily basis. “I look at the number of customers we backor
dered,” he said. “I might know the sales that day, but I might not. We’re much more focused on the service reports because (if) you take care of the customer, the sales are going to come.”
It is hard to do any Google search for the Uihleins or the company and not find articles about Liz and Dick’s political activity. They have been major donors and supporters of Republican candidates and causes. Liz Uihlein acknowledged taking a political stance does cost the company some sales. “Since we’re private and we’re pretty passionate about it we feel that we should speak up,” Uihlein said. “I think people would say we’re kind, generous people but I believe the best thing you can give somebody is a job, not a government handout.”
Hunt said the political activity is not a major issue for the business.
“We lose some (sales), but most people are paying for a service and in the end, you’re paying for the service and you need the product,” he said.
FINDING THE RIGHT PRODUCTS
In addition to a growing economy and customer service, Uline has actually benefitted in some ways from a recent Supreme Court ruling that requires companies to pay sales tax in a state whether they have a physical presence there or not.
“We don’t like paying sales tax in every state,” Uihlein said. “(But) one thing it’s allowed us is to have our sales force go to every state because we have to pay sales tax anyway, so we’ve actually been expanding the sales force and they’re out and about in more places than just our distribution states.”
That growing fleet of sales reps provides infor
mation to the company on what products customers are looking for that Uline doesn’t carry. The information goes to marketing representatives for each product line before it’s filtered up to Uihlein and others who zero in on the most heavily requested items.
“We know the number of times a product has been requested through the year so they use that to help drive that process,” Hunt said.
With a 788-page catalog that will soon grow to more than 800 and run up against U.S. Postal Service limits, it’s hard to imagine Uline not having a product, but the company will add 1,200 new items with its next catalog.
There is a room on the second floor of Uline’s Pleasant Prairie headquarters with every page of the next catalog pinned to the wall. Each page, including copy and photo, will get attention from Uihlein before going out to customers.
“It’s how do you market it to your customer? For the guy on the street, how do you make it simple to put it in the catalog so they understand what it is, what its purpose is and why they should buy it?” Hunt said. “So, (Uihlein) really does that and she does a great job with the merchandising team with the copy and the photos and all that and she loves it.” It might seem odd to continue mailing an 800- page catalog in an era of online ordering, but Uihlein likened the twice-a-year mailings to the repetition of advertisements by major brands and said it works for the company.
“It’s very effective for us to mail those catalogs; they’re basically not that expensive,” she said. “You go out to a warehouse and they’re flopping around and then ‘Oh, I need something, well, I’ve seen it, I’ll look it up in the catalog and then go order it on the web.’”
JAKE HILL PHOTOGRAPHY
THE RIGHT PEOPLE
Whether they are family members or not, one of the biggest challenges facing the company is filling leadership positions, along with continuing to hire for sales and warehouse positions.
“We just don’t have enough people to fill some of those slots,” Hunt said. “And you want some outside experiences as well, right? Because it challenges what we’re doing.”
Finding people isn’t getting any easier with a tight labor market and continued economic development along the I-94 corridor. Kenosha County averaged an unemployment rate of 3.7% last year, up slightly from 3.5% in 2018, but a far cry from the 10.3% average in 2010 when Uline picked Pleasant Prairie.
“There must be people around because we’re hiring,” Uihlein said.
One of the benefits for Uline when the company moved across the border was the proximity to its previous location. Employees who lived in Illinois did not see much time added to their commute and those in Wisconsin had a shorter drive.
Kenosha County itself has historically had a lot of employees working in Illinois. According to
U.S. Census data, around 27.3% of county residents worked outside of Wisconsin in 2010. The county’s growth of the past decade put a small dent in that figure – it’s now 26.8% – but there are now nearly 7,700 more Kenosha County residents working in Wisconsin than in 2010.
“So far, it’s supporting the growth,” Hunt said. “But we’re always concerned about … as the older folks start retiring, are there enough younger people? And are the schools teaching what they need to be teaching to get the quality employees?”
He noted that across geographies the company finds it challenging to hire people who can write copy or memos that communicate thoughts in a short, coherent way.
“We have these tests that we’ve developed and I’m the No. 1 fan of the test,” Uihlein said. “If you work here you believe in the tests and the lack of writing that’s coming out of school. Often (new hires) come in here, they take a right turn and go to (company training for) ‘how you write at Uline.’ It’s a real problem.”
“You have a lot of people that can give you data but they can’t tell you what it means,” Hunt added. The right mix of family personalities, a focus on customer service and a growing product line all help a company reach new heights, but sustaining success requires people and the right people at that. “Honestly, there’s been good people that work in the family business line and we’ve had some great business advisors,” Uihlein said. “We were lucky as we went along to have people that have helped us … I mean, we’re 40 years old now, so it wasn’t like an overnight, you know, pop sensation. It just built up slowly.”
But, like many companies, Uline is running into the challenges of long-tenured employees deciding to retire.
“We’ve had the most amazing management team all these years,” Uihlein said. “Every day we go to work and everybody’s going to be here. Well, now they’re starting to retire and they have every right to retire and then the generation below is smaller. It’s a smaller pond to fish in and, like a lot of companies, we have to either bring the other ones up or hire outside for some key positions.”
Uihlein jokes that she’s been talking about her own retirement for 15 years and said some days it does feel like it would be nice to just go on a long hike or sit on the couch and read.
“If it were that easy, you know, I guess I would be retired, maybe not,” she said, pointing out that she was happy as a housewife before starting her career. Hunt said it is hard to find a replacement. “Plus, she loves what she does, so she doesn’t want to give it up,” he said. “She wants to give parts of it up but it’s hard to find somebody – she has 40 years with the business – that has that much knowledge to come in and start taking over.”
Uihlein noted that Hunt, who has been with Uline 28 years and is the No. 2 person at the company, has never shown an interest in taking over the top spot.
“It’s not my skill set and it’s a lot of work,” he said. There is a second generation of Uihlein family members in the business. Duke is a company vice president; Freddy Goldenberg is in corporate planning and Brian is a vice president of merchandizing. Liz Uihlein said the idea would be to eventually move the company to a second generation of family ownership, “but we’re realistic.”
“You know I always say I’m like Virginia McCaskey,” she said in reference to the 97-year-old owner of the Chicago Bears. “Dick and I say ‘while we’re alive,’ you feel a huge responsibility for your employees, you know what I mean? And I don’t want to crap out on them … so while we’re alive, but certainty nothing lasts forever.”
Uihlein said one of the challenges in family business is parents raise children to be independent and think and act for themselves.
“Then we’re supposed to all love one another in the family business together … it’s a conflicting deal,” she said. n
Presents:
April 30, 2020 | 7:00-11:00 am | West Bend Mutual Insurance Company’s Prairie Center
A Futurist Toolkit: Seven Practical Ideas on How We Get to 2035
Join us on April 30th as Futurist David Zach shares his insights on the next fifteen years. Between now and then, a lot of other people will make specific predictions about Washington County and the SE Wisconsin region. Instead of just fascinating and/or frightening forecasts, you’ll get a “toolkit,” a set of questions to ask on how to put all those fads and trends in a practical perspective. David Zach has a degree in Futures Research from the University of Houston. He’s done over 1500 talks for various organizations throughout North America and Europe. Following the keynote presentation, local CEOs and industry leaders will discuss how their companies are adapting to remain competitive and relevant for the next two decades and beyond in our ever-changing world. David Zach
FOLLOWING THE PRESENTATIONS, the program continues with 12 unique roundtable discussions led by an expert discussion leaders. Expected Topics to include (partial list and subject to change): § Education & Upskilling your Workforce § Economic Development – Planning for 2035 § Investing in Leadership § Transportation § Housing and Construction Trends § Technology Trends for Manufacturers § Talent Attraction and Creating Strong Cultures
REGISTER TODAY! biztimes.com/2035
Joe Maier
Senior Vice President Director of Wealth Strategy
Johnson Financial Group
Asuccession plan starts with an honest evaluation of the values and beliefs of the owner. What does the business owner want for and from their business: legacy, loyalty or liquidity?
The answer to that question is the perfect place to start.
If the business owner’s primary purpose is legacy, then ownership tends to transition to family. If loyalty is key, then insiders (people who work for the business) tend to get ownership. And if liquidity is the primary purpose, the business is generally sold to an outsider (a person not involved in the business). Legacy
It is understandable why most business owners want to transition ownership to a family member. But a plan of legacy has challenges and issues that must be addressed. First, a critical focus needs to be on creating a governance structure to ensure that the best decision-makers are empowered to make the best business decisions.
Second, there needs to be thought on how to address involved and uninvolved family members. Should all children own the business equally, regardless of involvement? If not, how are concepts like equality addressed in the plan?
Third, if more than one child is to be involved in the business, how does the business structure the right roles to maximize each child’s impact?
Finally how should each dollar of profi t be divided among owners, decision makers and employees? Are the right incentives in place for the business to thrive and grow? Loyalty
When driven by a sense of loyalty, the succession plan is designed to empower
loyal managers and minimize disruption to loyal employees. Consider the following risks in transferring ownership to business insiders.
One risk is the possibility that managers will be unable to evolve into effective leaders and owners. A leadership consultant can help the future owners effectively change roles in a way that will not disrupt the company.
A second risk is that the new owners will not have the skills to replace the former owner. Loyalty-based succession plans work best when leadership is transitioned before ownership.
A third risk is that the current owner is critical and when gone, the team loses its ability to function. Again, the owner should allow the team to operate on their own prior to transition.
Liquidity
When liquidity is the priority, the succession plan is directed at maximizing price. Key questions an owner should consider are: » What critical decisions are made by people other than me? » Are these people willing to stay at the business after my departure? » Where do our revenues come from (many clients or a few)? » Why do our customers work with us (due to me, my team or some other reason)? » Do we have the right processes and systems to run the business? » Do our fi nancials have credibility? » Knowing what I know, would I buy the business for the asking price?
This self-scouting should be done with an investment banker who provides a mirror to the owner to uncover blind spots.
ENVIRO-SAFE RESOURCE RECOVERY W130 N10500 Washington Drive | Germantown, WI 53022 (262) 790-2500 | enviro-safe.com
WHAT FAMILY MEMBERS ARE CURRENTLY INVOLVED IN THE BUSINESS? Currently, my wife and mother-in-law are involved in the business but we are hopeful that one day our son would be interested. At the present time he seems to be intrigued but a lot can change over the years since he is only a freshman at Marquette University High School (MUHS). It is our intention to continue to grow the business so the opportunity is here for him should this be the path he wants to follow.
WHAT VALUES OR PRINCIPLES GUIDE YOUR BUSINESS? Our core values are simple...Respect, Passion, Integrity, Sustainability and Trust. Our company is committed to our employees, our customers, the environment and our community. These guiding principles have allowed us to grow into a Midwest industry leader in sustainability programs and waste management solutions. We pride ourselves in helping companies reduce their overall costs and meet their corporate recycling goals while providing superior customer service.
Jeffrey Vilione and Dawn Vilione
WHO OR WHAT INSPIRED YOU TO START YOUR OWN BUSINESS? My brother introduced me to the industry when he moved his company from Houston, Texas to Milwaukee. I started in sales and quickly worked my way to being a minority shareholder in the company. I always had the aspirations to have my own company and eventually I went my own direction and started Enviro-Safe in 2002.
HAS YOUR BUSINESS STAYED TRUE TO THE FOUNDING FAMILY’S ORIGINAL MISSION? Absolutely…we stay true to ourselves, our employees and our customers. Everything starts with us and we are able to ensure the culture of our company and the people that work for us reflect our core valves that we are not willing to compromise. We continue to employ and hire people that have the same high level of integrity and want to be a part of growing company. Blessed with the opportunities in front of us, we feel we are just scratching the surface, seeing great potential and experiencing continuous growth.
WHAT IS THE BIGGEST LESSON YOU HAVE LEARNED WORKING IN A FAMILY BUSINESS? My stepfather was a partner in a family business where I had the opportunity to work though my high school and college years. As a result, I was able to see personally the pros and cons of working in a family business environment. As everyone can image, working with family members can be challenging at times but at the same time they bring an undeniable amount of loyalty and trust which is comforting.
Emteq founder Jerry Jendusa (right) and co-founder Jim Harasha in Emteq Inc.’s first building.
Preparing for the sale, and what comes next
SERIAL ENTREPRENEUR JERRY JENDUSA had a vision when he sold his company, Emteq Inc. in 2014. He would stay on with the company, travel to each of its seven offices around the globe, and explain the transition to employees and the benefits of where Emteq was headed.
However, Jendusa would soon learn that “once you sell, you sell; you’re no longer the final
decision maker,” he said.
Not even three months after the sale, Jendusa quit Emteq in a move that he described as “probably premature.” He had hoped to stay with the company for at least another year to ease the transition.
“(Florida-based B/E Aerospace, which acquired Emteq) didn’t really want any of that,” JenBY BRANDON ANDEREGG, staff writer
dusa said. “They wanted me for a totally different role within the organization, and I just wasn’t interested.”
Business owners in their 30s and 40s might have an idea of when they plan to sell their business and a person in mind that is capable of carrying on their legacy. But timing the market and preparing for the right opportunity to sell – even
Imagine everything that comes next.
Announcing our new Milwaukee office. Located at 611 East Wisconsin Avenue. OPEN FOR BUSINESS.
—Brad Herda
After more than 100 years in business, we’re opening an office in downtown Milwaukee. We may be new to downtown, but we’ve been working with business customers here for years .
Unlike other banks in southeast Wisconsin, we at Ixonia
Bank have the luxury to be prudent with your financial
future. The philosophy of Professional Ownership, ®
developed by Sheldon Lubar, is woven into our daily operations. Because we know success doesn’t just happen overnight, we focus on the long-term, building relationships, not transactions.
Call or visit us at our new downtown Milwaukee office where you’ll find the greatest returns result from mutual respect and trust .
414.763.2428 • ixoniabank.com
—Corey Vanderpoel
if that opportunity presents itself in a business owner’s middle age – is critically important, said Brad Herda, a certified FocalPoint business coach based in Sussex.
“It’s strategically being prepared for opportunity, versus saying it’s going to be a point in time or a dot on the map that has to happen,” Herda said. “That opportunity could happen when you’re 39 because of market trends or capitalizing on what might be happening with economic conditions right now.”
When the time does come, the less ambiguity the better – not just in terms of business financials, but also the reason behind the sale.
“If you’re the buyer and you know why it’s up for sale and what that story is, it’s going to give you a sense of confidence and trust that you’re not being duped,” Herda said. “Having clarity on that is key because it will also help maximize the value of that business when it sells.” An entrepreneur should always run their business with a valuation and an ultimate exit in mind, said Corey Vanderpoel, owner and managing director of the Taureau Group, a Milwaukee-based investment banking firm.
In an ideal scenario, an entrepreneur will have had conversations about selling the business years in advance, not just with family, but with trusted business partners and M&A experts. Through those conversations, a business owner can identify weaknesses and better understand how a prospective buyer will look at his or her business.
“We can help them work through those challenges to the business so they can create more interest, which drives negotiating leverage, which drives value,” Vanderpoel said.
Many business owners that want to sell will do everything they can to take as much capital out of the business as possible. That’s a common
Chart a Course for Lasting Legacy
At Reinhart, we help high-net-worth clients build and preserve wealth, whether they are actively engaged in business or enjoying the rewards it has produced.
Understanding the unique intersection of business and family, we offer experienced counsel across the full continuum of trust law—from business succession, estate and tax planning, to contested fiduciary litigation and estate and trust administration.
Throughout the process, we work closely with our clients to steadily build wealth while securing the legacy of the family and business.
The Reinhart Trusts and Estates Team Brett Erdmann, Wendy Rusch, Matthew Ackmann, Jessica King, Caitlyn Sikorski, Kelsey Bailey, Joseph Bukowski, Kelsey Berns, John Herbers, Jennifer D’Amato (chair), Nathan Johnson, Christine Rew Barden
mistake, Vanderpoel said.
Instead, the most opportune time to sell a business is when it has a promising future.
“You’ve actually invested in the organization and administration of the business to then be able to present what those opportunities are and the financial performance of the business,” Vanderpoel said.
Vanderpoel equates the situation to selling a home. Oftentimes upgraded kitchen appliances or a retiled bathroom can make all the difference in the sale.
“All of those investments in the business will actually result in value when you sell the business,” Vanderpoel said. “And that can be counterintuitive to a lot of business owners.” In Jendusa’s case, the issue wasn’t the lack of a well-formulated plan. Rather, he found he wasn’t fully prepared for the emotional component of selling the business and navigating the uncertainty of what came
B I Z T I m e S MKE PODCAST
next. Most business owners aren’t, Jendusa said.
“What are you going to do in your second-half act? Because if your whole life and identity, (as it was) in my case, was attached to my business, there’s going to be a point you go through this emotional disturbance,” he said.
For Jendusa, his encore was co-founding Stuck LLC, a Wauwa
—Jerry Jendusa
tosa-based business advisory firm, in 2014.
Still, it took Jendusa years to fully understand how he felt about the Emteq sale, the impact it had on his former employees and the process of moving on to his next endeavor.
However, when he and his former employees gathered for a fiveyear reunion following the sale of Emteq, Jendusa discovered the longterm benefits of selling the company. “(The employees) developed so many skills and were so capable that they could work anywhere,” Jendusa said. “And then really enjoying and celebrating the ride and the culture that we created. Because anytime there’s a sale, the culture is going to change, whether it’s for the better or for the worse. And who’s to judge that?” n
A PODCAST ABOUT PEOPLE, ISSUES AND IDEAS.
The BizTimes MKE Podcast is designed to keep you informed and provide ideas and strategies to help improve your business. Each episode features thought-provoking insights and best practices from business and community leaders.
LISTEN EVERY WEEK ON:
CATCH UP ON RECENT EPISODES:
FEBRUARY 10, 2020 Tina Jones Girls on the Run: Taking on challenges one mile at a time
FEBRUARY 3, 2020 John Franke A non-partisan guide to impeachment
BIZTIMES.COM/PODCAST
JANUARY 31, 2020 2020 BizTimes Economic Trends panel Q&A
