C. John Bongiovanni, who has been president of Bon Tools since he father, Carl, died of a heart attack in 2017, said he had also dealt with a lack of a succession plan. But what made the initial transition especially difficult, he said, was the lack of insurance, which would have given him some breathing room to sort through the company’s finances and tend to its 70-plus employees.
“The toughest thing at first was to circle the wagons and figure out what was what,” he said. Key person insurance would have also relieved him of some of the pressure he feels to buy other parts of the business, like its real estate, from his mother and to begin to compensate his two sisters, who are not part of the business.
While he had worked at the company since he was young, Mr. Bongiovanni said, he had little idea what a transition might look like when his father, a fit, trim 59-year-old, died.
“My father and I would talk about business, but it was the exciting parts, not the down and dirty,” Mr. Bongiovanni said. “It was, ‘Oh, did you see that piece of business?’ I’m not sure we would have laid everything out, but I could have had his wishes.”
In these kinds of situations, said Erica Bramer, managing partner at the BVA Group, a litigation, valuation and financial advisory firm, the two main things to avoid are confusion over who is in charge and who knows what.
“The simplest form is the owner dies and it’s unclear how the business is going to pass to someone else,” Ms. Bramer said. “Let’s say there are multiple kids. What’s best for the family? What’s best for the business? What did Dad intend? Once you layer in other business partners or other employees who thought they owned part of the business, it becomes even more complicated.”
Mr. Baum at Interchange Capital Partners said he counseled clients who suddenly had to take control of a company to think in terms of damage control.