The Secret To Succession – The Gelderman Story

The Secret to SUCCESSION –

X + Y + Z = 100%

Experts say one of the biggest crises facing businesses is the imminent succession wave, as thousands of baby-boomer entrepreneurs prepare to retire and pass their companies on to other people.

The risk is real! The average life span of a family-owned business is 24 years (, 2010). About 40% of family-owned businesses turn into second-generation businesses, approximately 13% are passed down successfully to a third generation, and 3% to a fourth or beyond (, 2010).

What are the Secrets of a Successful Transition?

Note: These tips are based on the successful transition of Gelderman Landscape Services (2nd to 3rd Generation).  Here is the winning formula:

X + Y + Z = 100% Success

X – represents the “Seller”
Y – represents the “Buyer”
Z – represents the “Company”

All 3 parties are vital to a successful transition!  As the Company will be the party “funding” the transaction!



  • The Apple is your Company!  Continue to develop your company that is polished and “Saleable”.  A company that someone wants!
  • Ensure the company is profitable and growing
    • Re-invest in Capital until the last day – Company must be “Top Notch”
  • Ensure financials are “clean” – no cash “Due to Shareholders”
  • Ensure that the company is not reliant on you, the SELLER.  Continue to build systems and processes.
  • Once the decision is made to “sell/transfer/pass on”, then Be 100% committed to the process
  • Pick a date – draw a line in the sand
  • Speak to your CPA/CA & lawyer
  • Understand the the process will take longer than expected

2. THE SELLER needs to set the PRICE & TERMS

  • Price it Right – Use experts in your field for assistance
    • Not too high
    • Not too low
  • Will full payment be due upon closing?
  • What will the Interest rate be if you are holding the mortgage?
  • Will you hold the mortgage? Vendor take back?
  • What will be the Length of Term?
  • Consider offering a “Mulligan” (ask me what this means here)


New Life Or Old Life Concept Road Sign With Cloudy And Sunny Sky Background. Stock Photo, Picture And Royalty Free Image. Image 37174975.

  • It is important for the SELLER to have hobbies and plans for what will happen after the transition
  • What will your “new life” look like?
  • What hobbies do you have?
  • Where will Volunteerism?
  • Do you plan on moving
  • Or will you get in the way?

As the SELLER, you need to have something to do after you sell your business


  • Is the Seller committed in stepping down was the sale occurs?  Are you 100% committed?
  • This is probably the most difficult move for a SELLER.  They have worked hard for many years and can be fearful of what happens to their “Apple”

1. Who can take over the company?  Who are the POTENTIAL BUYERS:

  • Employees – Employee Share Ownership Program
  • Competitor
  • Private Equity
  • Family Member(s)

2. Every Buyer needs to consider the following:

  • The buyer needs to have “skin” in the game.  The buyer needs to feel the “heat” or “fire” of the purchase!
  • Gifting or under valuing the business for a family member is NOT recommended
  • Stress and pressure is good
  • Respect the past, but move forward
  • Grit and tenacity are required

Wash Wisdom: 7 tips for selling your business - Professional Carwashing & Detailing



  • For family members/employees
    • Get clarity and accountability – create success profiles for each position.
    • The new Buyer needs to understand all aspects of the business
  • The new Buyer must “Command Respect”, not demand respect from everyone!


“It’s the way we have always done it”
The Leadership Path
  • Don’t fall into this trap – of saying “it’s the way we have always done it”!  I believe that there is nothing sacred in the business!  Respect the Past, BUT move on!
  • Don’t mistakenly adopt the prior generation’s strategy and way of running the business!
  • Complete a SWOT and your own Strategic Plan for the company
    • Be clear on your Core Values, your “Why”, your BHAG, your Goals and what is required to hit your goals

Communicate the future direction of the company, continuously!

Positive And Negative Risk


  • In every transition there are the potential risks.   Prepare for the worst.
    • Loss of key supplier(s) – some may not want to sell to you
    • Loss of key customer(s) – some miss the Seller and don’t have a relationship with you (the Buyer)
    • Loss of employees – some don’t like the new direction that the company is going
    • Banks and Lenders – they are worried that the company will not be successful (as the stats are not in favour for the Buyer)

9 Ways Your Gross Profit Is Misleading You


  • The Company must come 1st!  It’s tempting as the new Buyer to take cash out of the company, but you cannot until the Financial Transaction has been completed
  • Remember that growth takes cash, and cash is King!

Fast forward to 2022, over the past 15 years I have been tremendously blessed!  The transition from the 2nd generation (Hank Gelderman – my father-in-law) to the 3rd generation (my wife and I) has been very successful and the Company (Gelderman Landscape Services) continues to thrive.  For a more comprehensive explanation, please view the presentation that I completed for Landscape Ontario here.

If you are thinking of selling your business and would like help with your Succession Plan, contact Southbrook Consulting.