One of the lessons of successful transitions to children is that they should, by design, take a long time. CEOs who wake up at age 65 and start trying to figure out how to retire are at a severe disadvantage.
Chris Cardillo, who worked 364 days a year for many years to build Mount Laurel, New Jersey-based Castle Windows, has two sons, an older one also named Chris and a younger one, Nick. Chris junior started working for the company in high school during summers, unloading trucks in the warehouse, and continued part-time during four years of college. Mom took care of the bookkeeping. The younger brother went to art school. The elder son shadowed his father’s movements for years. Meanwhile, his younger brother started to transition into the business to take the mother’s role.
Then, one day in 2001, the father decided it was time to test his sons. The company decided to move into the market for windows in New York State, where it did not operate.
“My father said, ‘You’re basically going to run this New York market,’” Chris recalls. “It was a testing ground for whether we could handle the business.” The sons passed the test and the father sold them the business in 2005 when he was 52 and they were 29 and 27, respectively. “My father is a planner,” Chris says. “He is an extremely detailed individual. He knew exactly what he was preparing me for from the day I graduated from college. It was a process he had in his mind.”
The sons have expanded the business from $14 million in annual sales to $75 million. The elder Cardillo has remained engaged in the business from the sidelines, offering advice and helping manage important business relationships. The sons are just fine with that. “Children have a natural tendency to not want to listen, but ultimately, you know you have an individual there who knows what to do,” Chris says. “You’d be foolish not to listen.”
Consider Your Second Act
Figuring out what you want to do next is one of the biggest challenges of any business owner’s exit strategy, experts agree. Jean-Marc Laouchez, who advises companies on behalf of the Korn Ferry Hay Group, says it’s relatively easy to figure out how to transition ownership of a company and the management of it. But the emotional piece is toughest.
“It’s something called ego,” Laouchez says. “Founders have been very successful. It’s not easy to give it away to a successor. They believe they are the only ones who can do it. Letting go is admitting that we can die. Many owners hate that idea.”
Often, the best transitions happen when departing CEOs feel they are developing a new legacy. CEOs who pursue these new legacies may think, “even though as a person I may not be around in however many years, part of me will still be around,” explains Laouchez. “I’ll be leaving my name, my business, my foundation, my philanthropic projects, my children. I’m going to hand down something that is valuable.”
It’s almost preparing for death as if it were a new entrepreneurial project. The bottom line? Baby Boomer CEOs need to decide what their own goals are with their businesses and undertake long-term planning with both family members and outsiders to come up with a viable exit strategy.