6 minute read
Succession Planning Without a Plan
by Reb Banas
Stanley Spring and Stamping Corporation was started in 1944 in Chicago by my grandfather Stanley Banas, a Polish immigrant.
Grandpa began the business with a hand coiler in his garage while working for another spring company. He later rented a three-flat with a manual elevator near where the old Chicago Stadium stood on West Madison Street, before moving to our current location on West Foster Avenue on the northside of Chicago.
My uncle Stan Banas graduated from high school in 1945 and served in the Coast Guard during World War II. He later graduated from Purdue University in 1950 and immediately joined the family business. My dad, Ron Banas, nearly nine years younger, joined the business after graduating from Lake Forest College and also serving in the Coast Guard.
There was no succession plan in place when my grandfather died of a sudden heart attack in 1954, while shopping for a birthday present for my dad at Marshall Field’s in downtown Chicago. With no succession plan in place, the business was divided equally between my uncle and my dad.
My dad and uncle enjoyed a long working partnership that saw the expansion of the business into areas such as fourslide and punch press. During their time together, they successfully added Stanron Steel Specialties in Ft. Lauderdale, Florida to the company’s portfolio in 1972.
I never got to meet my grandpa. As a third-generation member of the Banas family who joined the company in 1989, I am sure Grandpa would have been proud that Stanley Spring and Stamping continues to thrive as a family-owned producer of custom springs, stampings,
The Banas family (l-to-r): Ryan, Madison, Reb, Megan, Reb and Blake.
wireforms and fasteners, serving many different industries.
I am guessing that Grandpa would have been disappointed to learn that the passing of the business to the next generation did not go as smoothly.
When my uncle Stan was in declin ing health (he died May 10, 2008), he passed his half of the business to one of his six children, unbeknownst to my dad. It was quite a shock when my dad found out he had a new partner.
That is when the bottom fell out. After I worked for almost a year to obtain a valuation for the business, my dad bought out my cousins to obtain 100 percent ownership of Stanley Spring and Stamping and Stanron Steel Specialties, and we moved on with running the businesses.
It was just ugly and it’s a shame that two close families fell apart. Even if we were still together or had reached an amicable dissolution, I’m not sure that we would have gotten along in the long
term. It was certainly one of those things that I never hope to go through again.
My dad died Nov. 19, 2015, and my mother, Adrienne, passed away just 15 months later. After their deaths, I went through the process of valuing the business all over again, though this time, the passing of the business was very amicable with my two sisters.
My sisters did not want anything to do with running the business, but they did want their share of the value of our family business. My parents were fair and split everything three ways. Until you go through the process of dissolving the assets, you essentially have to go through the process again of paying for the business and valuing it all over again. Believe me, I am not complaining, I just felt at the time that there had to be an easier way.
Fourth Generation
My wife, Megan, and I want to treat our four children equally, just like my parents did. Blake, our daughter with special needs, won’t be going into the business. Right now, I do not know if any of our other three children, Madison, Reb, or Ryan, will want to join the family business. I’m certainly not pushing any of them into doing it.
All three of them have worked here in the summer, and they get along with people. They know they have to be here on time and work hard. As the owner’s kids, they do get to go to lunch with me at Colletti’s, a nearby restaurant where my
dad and I always dined. Other than that special privilege, I have preached to each of them that they have to earn their stripes, so to speak, and not to take anything for granted.
What would I do differently in passing the baton to the next generation? From my experience with the change in ownership between my cousins and my parents, I would be more upfront about exactly what is going to happen, so there is just no debate upon my demise and Megan’s.
If any of my children would like to get out of the busi ness, they would have the right of first refusal on any purchase or acquisition. I would try to have them all work together, whether it’s in an advisory role or directly in the business. We would do everything we could to keep the infighting and jealousy from happening, or anything else we couldn’t predict.
I’ll say that during this whole pandemic thing, my chil dren have gotten along well with each other. Other than spirited golf competitions at our house, they have been great. Plus, they all look after their sister, Blake. We are very blessed when it comes to that.
I believe having a definitive timeline on when you do things is important.
I am currently 56, and hope to have a rough succession plan put together by time I turn 60. Basically, I want to have a discussion with the family and the outline of a plan. By 70, I want to have the wheels in motion of how things will be dispersed. I want to have everything done, so when the time comes to transfer the business to the next generation, there is no surprise “magic envelope” that anyone will be opening.
I have already gone through two changes of ownership with no document or plan in place, and you do get better at each time. In hindsight, I now see the value in having a document in place with everything written out. And once you do that, you can update it every couple of years as circumstances change.
I would caution that a plan is not mandatory, but it certainly helps. It is better for everyone involved in a transfer of ownership, whether you paid for it or gifted it, that it is done while you are still alive. And if you should somehow bite the bullet, you have got something in place that lets everyone know your intentions.
Family businesses are a funny thing and a staple of our industry. Having a succession plan is a recipe for success to keep the “family” in business from one generation to the next. n
