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Exit strategies
Taking the mystery out of succession planning

Landon Reeve, CCLP, founded Maryland-based Chapel Valley Landscape Co. in 1968. Nearly 40 years later, his company employs 475 people and has annual revenues of $46 million. Although his son James is company president, Reeve is chairman of the board and shares decision-making power.

When he retires from the company, don’t look for many dramatic changes. In addition to operating one of the most successful landscape contracting companies in the country, this business owner has also devised a succession plan that will perpetuate his legacy.

“I think it’s hard for any business owner to think about not being productive, and that’s one of the biggest stumbling blocks to formulating a succession plan,” says Reeve. “It was for me, anyway, but I wanted to perpetuate the company and create a smooth transition plan.”

Reeve’s succession planning involved four important steps. He:

• Shared his thoughts about succession planning with employees
• Assembled a management team
• Developed a financial plan
• Continued to work the plan

Sharing information

Reeve began thinking seriously about succession planning at the age of 45, when he started attending seminars and reading up on the subject. “Don’t worry about finding resources to help you become acquainted with the process,” he emphasizes. “Magazine articles, books, and family business centers, many of which are located on college campuses, have plenty of information on the subject.” As he points out, the Internet provides another valuable tool for solving the mysteries of succession  planning.

Once he knew what he wanted to do, his next move was to alert his employees. “I think business owners need to be open with their employees and make sure they understand what the future holds for their careers,” Reeve relates. “I wanted my employees to know that I intended to perpetuate the company and that my eventual retirement would not dramatically change the scenery around here.”

Reeve emphasizes that it took him between 10 to 15 years to finally get a succession plan in place, assemble a management team, and develop a financial plan. “You need all these components,” he relates, “and that’s what becomes time-consuming.”

Management team

On the management side, he started challenging employees in 1993 to take on more responsibility. Reeve gave son James and daughter Deonne the opportunity to experience different roles within the company. James moved around a bit in the regional office and Deonne headed up the HR department. In both cases, he found that the less he interfered with their decisions, the better off they all were. “If you’re going to relinquish control, which we will all do someday, delegating responsibility and making individuals accountable become paramount,” says Reeve. “No matter where your company stands regarding a succession plan, the fun of running a business comes from hiring smart people, allowing them to do their best work, and watching them grow.”

He continues, “Over the years, we’ve restructured the management team a few times to meet changing demands on the company. Today, it is comprised of six individuals, including my son and daughter, the company CFO and vice president, the HR manager, and two regional managers.”

Fiscal responsibility

 Having a plan to turn over control of a company gets owners only halfway to their goal. They also need a plan to turn over ownership, and that’s where having legal and financial advice becomes very important. “You really can’t do this alone,” says Reeve, referring to the transfer of ownership. “Over the years, I have relied heavily on our accountant and attorney to help me put together a solid exit strategy. In very simple terms, my son and daughter now hold the bulk of my stock, and we set up a trust that pays me the value of what the company is worth. I retain voting control of the company but have no real financial interest.”

Work the plan

 Over the years, Reeve worked and reworked the plan. In 1994, a year after committing to a succession plan, his first wife passed away, which forced him to redo all his estate planning. Since then, a changing marketplace, healthy growth, and new faces within the company (70 percent of Chapel Valley employees speak Spanish) have created management challenges and opportunities.

“When I started the company, I was passionate about establishing a landscape company that I could be proud of,” Reeve recalls. “I had a clear vision of where I wanted to go and how to get there. I shared my ideas with family members and employees and tried to hire people who shared our values, too — the prime one being that you have to take care of the customer.”

When Reeve hands over control of the company to his family, he is assured that his vision still will be in place and that his son and daughter will have the experience and knowledge in hand and the people in place to see it through. As he points out, succession plans come in all sorts of shapes and sizes. The most successful ones, however, start out early and succeed by creating a smooth transition of ownership, management, and culture.