FAMILY BUSINESS By Ged Henderson
PUTTING SUCCESS INTO SUCCESSION
It is the question that faces every family-run business at some stage. What happens next?
For some the answer is simply to pass the baton on to the next generation. However, keeping it in the family isn’t always a viable option. Other businesses take the sell-out route but that can be fraught with difficulties.
Here we look at three very different Lancashire family businesses and the very different routes they have taken when it comes to their future directions of travel.
Members of the Conlon team CASE STUDY 1: BUILDING FOR THE FUTURE
In 1961 five brothers working on a road project called ‘The Preston Bypass’ founded a construction company, giving it their family name.
More than six decades after that work, on what is now known as the M6, the Conlon name became an important factor when it came to deciding the company’s next direction of travel.
This summer the Bamber Bridge based business, revealed it had moved from family ownership to an Employee-Ownership Trust (EOT).
EOTs have become increasingly popular. It sees a controlling interest in the company transferred to a trust which is then held for the benefit of employees.
The change in ownership followed many months of planning by the board of directors and the Conlon family.
Chairman Michael Conlon says that when it came to looking at the future of the business, passing it down to another generation of the family was a non-starter.
He says: “We had 44 family shareholders in total. Quite a few were third generation, none of whom were showing interest in joining the company. Some live long distances away and felt ‘disconnected’, whist a number just wanted out.”
The board and family explored the options available to them. Selling out to a bigger company was also dismissed. The Conlon legacy was always going to be an important consideration.
Michael, 63, says: “From the outset we wanted the company to stay with the same ethos. From the outset, our founders, those five young Conlon brothers, put people at the heart of the company.
“We also wanted to keep the family name, which is a good name in construction. Selling out to a national business would have seen staff going. It really wasn’t on the radar.”
The idea of any management buy out was also ruled out. Michael says: “You have to borrow so much third-party debt; you end up working for the banks.”
He adds: “We’d heard of EOTs but didn’t know much about them. Once they were explained it seemed the way to go.”
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