C. John Bongiovanni, who has been president of Bon Tools since his father, Carl, and who died of a heart attack in 2017, said he also looked into the lack of a succession plan. However, what made the initial transition particularly difficult, he said, was the lack of insurance that would have given him some breathing space to sort out the company’s finances and take care of its 70+ employees.
“The hardest part at first was circling the cars and figuring out what was what,” he said. The key person insurance would also have relieved him of the pressure to buy other parts of the business like real estate from his mother and to compensate his two sisters who are not part of the business.
While working at the company since his teens, Mr Bongiovanni said he had no idea what a transition might look like if his father, a fit, lean 59-year-old, died.
“My dad and I talked about the business, but it was the exciting parts, not the shabby and dirty,” Bongiovanni said. “It was, ‘Oh, did you see the shop?’ I’m not sure if we would have planned everything, but I could have had his wishes. “
In situations like this, said Erica Bramer, managing partner at BVA Group, a litigation, valuation and financial advisory firm, the two most important things to avoid is confusion about who is responsible and who knows what.
“The simplest form is that the owner dies and it is unclear how the business will be passed on to someone else,” said Ms. Bramer. “Let’s say there are several children. What’s best for the family? What’s best for business? What was papa up to? Once you bring in other business partners or employees who believed they owned part of the business, it becomes even more complicated. “
Mr Baum of Interchange Capital Partners said he advised clients who suddenly needed to take control of a company to think about damage control.