From Strategy to Transition: A Business Journey - The Transition Strategists

This episode is with special guests, Elizabeth Ledoux and Andrea Carpenter of The Transition Strategists.

Elizabeth Ledoux is the founder and CEO of The Transition Strategists, an international consulting firm that creates business succession plans for family and private businesses. One hundred percent of the owners who have used her company’s proprietary Transition Roadmap Developer™ to choose and mentor capable successors have positioned their companies for ongoing success and moved forward to live happy and meaningful lives.

With a career spanning over 30 years, Elizabeth has helped hundreds of business owners navigate the complex dynamics that come with business shifts. She works with individuals and families who share her belief that a business transition is only successful if it protects and supports an owner’s most important relationships.

Elizabeth is an entrepreneur who has founded several businesses, a thought leader and sought-after speaker, addressing the topics of business succession planning, challenges and opportunities in private and family business transition, business and individual growth, and the business succession journey. The Harvard Business School has recognized Elizabeth for her work linking the growth and development of the entrepreneur to company success.

She is the host of the podcast Business Transition Roadmap and co-author of three books, including the award-winning It’s A Journey, The MUST-HAVE Roadmap to Successful Succession Planning, (Sky to Sea Publishing, 2021).

You can contact Elizabeth at:

Email:  elizabeth@transitionstrategists.com

Phone: 720.989-8831

Website: https://transitionstrategists.com/

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Andrea Carpenter is a UX designer turned business transition guide who's walking the succession journey herself as the incoming President of The Transition Strategists. After watching her dad navigate selling his business, she developed a passion for helping the next generation in successful families write their own stories while honoring their family legacy.

Through her work at the Transition Strategists and as 'Your Next Gen Friend,' Andrea loves creating psychologically safe spaces where rising gens can have authentic conversations about identity, relationships, and purpose beyond the family business. With her unique perspective as both a successor and advisor, she brings a refreshing blend of lived experience and practical frameworks to help others navigate the messy, beautiful path of transition.

You can contact Andrea at:

Email: andrea@transitionstrategists.com

Phone: (303) 790-0754

Websites:  https://transitionstrategists.com/, https://yournextgenfriend.com/

Free Business Transition Resource: https://letstalktransition.com/iba

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About Steven Denny: Steven Denny co-founded Innovative Business Advisors in 2018 and serves as a Managing Member of the firm. Steve has been actively engaged in M/A activities in a wide variety of industries for the last 14 years and has developed specific products to assist clients in growing their profitability and enterprise value. His specialty is working with established private companies in the lower middle market with annual revenues from $1 – 50 million.

Thanks for listening to our You Don't Know What You Don't Know podcast! To sign up for podcast updates or to recommend a guest for our podcast, click here.

Transcript

0:02  
Welcome to the You Don't Know What You Don't Know podcast by Innovative Business Advisors. Successful business owners who have started, grown and led businesses share their journey and direction for the benefit of those traveling the same path. So today we're with Elizabeth Ledoux and Andrea Carpenter, they are the transition guides with The Transition Strategists out of Denver, Colorado. And The Transition Strategist is a premier transition strategy company that guides their clients to creating the ideal strategy that is unique to their individual clients, requirements and desires, delivering a transition that everybody can be very proud of. And ladies, welcome, and I'd like to say that it's fascinating, because here we are with a real, live example of what you guys do. So Elizabeth, Andrea is your chosen successor, and you put in the work to really develop a transition plan that works out, you know, ideally designed for you and your company. So love to have you ladies talk more about that.

1:17  
Yeah, yeah. Thank you, Steve, thanks for having us. It's such a pleasure to be here. And, you know, it's interesting. I think there are many business owners out there who have teams their you know, their business team is thinking, you know, what happens if something happens to you? What happens if something happens to the owner, and that happened to me, my team was, we were doing fine, and this was probably about four or five years ago, and we did a nice SWOT analysis, like you do when you're doing your strategy work. And, and my team, one of the one of the top threats that they saw in our company was me as a sole owner and kind of the leader and in the business. So anyway, they put it on my list of stuff to do to figure out what my transition plan was going to be. And that was kind of interesting, because I was like, oh, you know, I do, we do this all the time. I've been doing this for years, but reflecting back and having to do my own was good for me. So walked through that process and came up with some strategy that I thought would be great, and it had, I had the opportunity to talk to my husband and learn some things about his ideas and what he saw too, which I had no idea. If I hadn't done it, I would never have understood what his perspective was. But we were able to bring those two together. And then about a year and a half after I finished it, I was kind of on my merry way, and, you know, had this idea of what my succession would be like, and I ended up at a meeting and met Andrea's dad, who said, Hey, would you talk to my daughter, and would you, she's going to build us a consulting company? And I said, Well, sure, I'd be happy to and and when we got together, I think because I knew what I was looking for, and I actually had a strategy, I was almost immediately able to invite her into some conversations, because I was ready. And had I not have been ready, I think I would have been afraid and maybe not even recognized what a great fit Andrea would, Andrea would be as my successor. So anyway, I'll let her tell her side of the story, but it was pretty cool how, how my journey went on this.

3:49  
Yeah, well, thanks again, Steve for having us. Basically everything that Elizabeth said so far is the truth that kind of matches up, I come in a little bit later in that timeline. I had left my full time job, thought I wanted to start doing some consulting or coaching. I was, I was just trying to figure out what's the space I knew growing up with a dad who started a business, had a very successful exit, that I wanted to work with next gens and successors in in families like this. And so I knew that that was my passion. I was just trying to figure out what the lane was. And so I met with Elizabeth, and I started sharing ideas with her. And I think it was that moment of she was like, Well, hey, I already kind of have something like this, and I appreciated the structure then, so I can look back on it now, and I'm like, Oh yeah, there was definitely a structure that was followed in terms of, like, how do I even evaluate if this could be something worth exploring more? So we went through a tool called the IMAP, which is basically a multi construct, like personality assessment. So what, what is Elizabeth's role in the business? And what am I, she's a little bit more of a creative vision, visionary. I tend to sit a little bit more on a refiner, integrator type role. And so therefore, automatically, off the bat, it was like, Oh, hey, we actually have some really complimentary skills. And she walked me through that and and showed me, like, Hey, if you did your own business, These might be things you would struggle with. Would you agree with that? And I, and I saw that, and I saw the possibility, kind of in the business, and so I was open to these discussions. And ultimately it led to, let's explore what it would look like to go into business together. We went through a tool that we call the objectives matrix, which is really just digging into what's the why. So Elizabeth had already done hers. What does she want to get out of life in the business, and she had me do the same, just to make sure that it was, that coming into this business was actually going to align with where I wanted to go in life. And when we had open conversations like that, and I was able to look at everything laid out, I'm like, oh yeah, this does actually really align with what I'm trying to go, what I'm trying to build the type of impact I want to have on the world. And so discussions became a little bit more serious. And so from a successor perspective, it also helped me feel like communication was open and there, and that I could, I could bring things up. We could talk more openly about what the future would look like. And I don't know how you feel, Elizabeth, but I feel like it's becoming, it's a little bit of our vision, like I recognize and I totally respect the legacy and everything that's been built before, but I do feel like, Hey, this is really cool. This is now something we get to go build together as we move forward. And this is kind of the ideal scenario for a business as an owner thinks about leaving and handing that off to the next person. You need someone like me. You need that successor, whether it's your kids or just someone who work, is working in your business, or someone that you're inviting in to feel like it's just as much their vision and their excitement and what's right for their life, so that everyone can kind of move forward feeling excited.

7:03  
Yeah. Yeah. No, I would, I would say that that's so true. Andrea and, and it's a, it, we have a couple of different workshops that we put together, but one of them is called metamorphosis. And it's a, it is a metamorphosis that an owner goes through to have your vision and have it become our vision, and then have it become, right, Andrea's vision. So my vision becomes our vision becomes Andrea's, and we're intentionally working on that. That's a part of our strategy. Because, you know, I've got three or four years to get that done, and right now, I'm glad it feels like it's our strategy, because that's what we're working on.

7:48  
That's great. How, how did, how did the, how did the team take this?

7:55  
Andrea, what do you think about that? Yeah, it's interesting being someone coming in, right? Because you don't want to just be like, Oh, I'm here and now, like, I've kind of stepped into this leadership position. So it was definitely some time of getting to know everyone, seeing what they felt excited about, building relationships before we kind of move forward, really, just if this is going to be eventually a team that I'm helping lead, like, are these people I want to work with? And we have a really great culture. We have really great people. So that was a very, very easy transition to me.

8:33  
From that perspective, I'm curious, Elizabeth from from yours, what you were seeing. Yeah, and I so, so in our work, what we, how we do this is we view transitions as a journey and not an event, because there are many events that happen along the journey to make a transition go well. Usually transitions are pretty chaotic. If they are an event, it's very difficult. So we, we started our journey by Andrea coming in and basically being a consultant. It was great because she could test out the waters and see if she liked the team and liked me, and liked what we were doing, and thought the tools were good. And, you know, she could check everything out, and I could do the same. I could not have an employee, not have anybody I had to fire. So we came up with a really good plan that met her needs where she was, and met our needs where we were. And so we did that, probably, excuse me, probably for about, oh gosh, nine months or so, maybe a year. So it took a little while, and but all along, you know, we were having these other conversations about her coming in. So I think the team, the way we put that together, you were, you became a part of our team externally, but then internally. And I could watch her performance from a business perspective, and we could see how we work together. And that was step one for us, because we didn't know each other at the time, like she's not my daughter, right? Which could be a benefit. You never know. But yeah, family transitions add an extra layer of complexity, but it was just great for us to have that opportunity. So now we're at the point of navigating the purchase and going forward over the next years, and ultimately, if everything goes well for her and for me, right for you, then she'll want to be majority owner, and we'll make that transaction, and then she'll be on her way. But we've got a long time to be able to get a lot of learning, and I have a lot of learning to do leaving and she has a lot of learning to do coming in. So there's learning on both sides and for the team.

11:05  
And it sounds like if you execute this, well, right, it's going to have nothing but a positive impact on the business. And you know, Elizabeth, you and I have been around the block a time or two, and we we see a lot of, we see a lot of car crashes happen, right? We see a lot of relationships that are broken up over a period of time, and a lot of businesses damaged and sometimes irreparably damaged, if it's not done well. Yeah, I'd say more often than not, Steve. Yeah, and that's what the studies say as well, right? You read about owners that transition out, most of them are unhappy, you know, one to five years afterwards. That is so true, yeah, because they and, you know, we, Andrea mentioned the objectives matrix, and that work is so important for someone to do, because if you have something that you really want to do, and you've got a vision of what that looks like, even though there's some unknowns in the middle, because you're not sure. But if you have any kind of vision, and you start to navigate that and test it out yourself as you are leaving the company and your successors coming in, it's, you typically should end up, yes, having some sadness leaving, but also having some big joy moving on to something else in your life, because people are living longer these days and they're healthy and active. So you know, why not go do something different and new?

12:49  
Yeah, and what we've seen in our limited experiences that business owners that do successful transitions are much happier, you know, one, three and five years out, because their baby's growing up and maturing and and, you know, developing this very successful life outside of the nest, if you will. And there's a huge amount of satisfaction that owners that transition well actually receive. Yeah, and a lot of it, some of it's financial, but I'd say a large portion of it is emotional, and just emotional well being and yeah, happy with the results and happy with people moving forward without them. Emotional definitely outlive the financial that's that's our experience anyway. So I love the tools that you guys bring to bear and and I love the fact that you started this yourself. And not only did you create these tools, you're living them now, you're living them firsthand, right? So you've been working with owners for several years, Elizabeth, you know, developing a lot of these tools, and now you've got this wonderful fresh perspective coming in, and you guys are using the tools and probably iterating on the tools and improving the tools, speak a little bit more about the tools that you bring to the processes as you work with your clients over this very sensitive process. Yeah. Thanks. Andrea, do you want to answer that first, or do you want me to go? Oh, why don't you talk about just kind of what the transition process looks like, and then I can share a little bit about a tool to get started. Okay, good. So over the years, yeah, these have been developed over the last 25 years plus, and each step of the way we do, you know, make them better and improve them and refine them. So we've got a very comprehensive process. People can come in at different stages, depending on where they are in the process. But we start with, it's kind of like, you know, any MAP program that you have on your phone. We start with everybody understanding, where are they currently. What do they have? Because you think you know what you have, but people have different perspectives. And so what one person sees that you, quote, unquote, have another or the position that you're in, another person might see a different perception. So, so we start with this thing called the current profile, where we do the IMAP that Andrea talked about for everybody who's included. And we really understand, gosh, from, you know, financial performance, insurance, we talk about estates, we talk about all different kinds of things, trying to get a picture put together that everybody can see, where are we starting from, so we have our current location. And then going back to that MAP program, you have to have some kind of a direction. You don't have to have a pinpoint destination, like this is where I want to be in 10 years, but you have to know your direction, that really helps. It saves a lot of money, a lot of time, a lot of heartache. Helps with communication. So we help them walk through this thing called our transition compass. And our transition compass, we walk through the why that Andrea talked about, we walk through, what do you have and what do you want to transition. We walk through the many wins like, when do I want to let go of a job or a task that I'm doing? When do I want to no longer be in the business? When do I want to transition some of my equity? When do I want to transition the rest and maybe with different kids? We really work a lot with families, so with different kids and ages. How do I bring in one, right, when one might be six years younger? And how do I figure that one out and wait or not? Wait all those different questions. So we talk about the who, and then we also talk about the how and how much. So we're very people oriented.

17:01  
We were talking earlier that it doesn't matter what the strategy is. If the people don't want to do it and it's not going to meet their needs, they are going to not do it, or they're going to get upset about it, or they're going to rebel against it. And we see it all the time. We end up with families who are not communicating, not talking to each other, really, in a poor position. So, so yeah, the how and the how much those two things are in the compass, and we work through those so we get an idea of how they want to do it and how much they need. Back to the financial piece of how much do I need to retire? Can the business cash flow? This like all those different questions. And after we get done with the compass, we've got the current profile, we've got the direction, the compass, then we choose the route, because we know where we're, we know what direction we're going, and so we help the owner and their successors choose the route and the route they that's their roadmap. So we help them build a transition roadmap with a timeline. And the timelines can go anywhere from two years to we've done over 15 because you find an owner or a founder whose family is in the business, and they just want to, they're loving being with their kids. They want to stay until they're no longer on the planet. So we just go 15 or 20 years out, and that's the plan, yeah, so those that's kind of the, there are a lot of tools inside of that. Afterwards we help with governance and structuring that so that people again, people first, just a variety of different things to help them on their journey.

18:49  
Excellent. Andrea, you want to add to that? Yeah, I'll just say something that we see a lot of owners getting ready to think about transition, especially when there's other people that you're bringing along with you. It's like, okay, how do I even, like, start this conversation? What's that first step? How do I bring it up? I don't want to promise something to someone that we're not going to go with. So how do we begin that conversation? So we have a resource. It's basically, it's called our the how to have the talk guide. It's basically a word for word script to help people who are prepping for a conversation. So you really, it's learn when to have the conversation and when to hold off, how to break the ice, what types of topics you might want to bring up in that initial conversation. And you can just download that. So we'll put that up at letstalktransition.com/IBA. And I'm sure you'll put that in the show notes for them to click as well. Yep, we'll put them the notes. Yeah, perfect. So, yeah, you could, you can download that really, just to leave to have those, those right words to talk with, with people about what's next. I think that's super, super important, and it helps the business owner feel better about a path forward. And it also helps and I can say this having lived the experience as a successor like let's just set good expectations and open a conversation to to really start a collaborative path forward as you think about what your transition might look like. So we'd love to share that with you. If that's interesting. Yeah, I think, I think our audience will find that quite interesting. It's a, it's a great way to start off on the right foot, right. What can I add? One thing, yeah, it just, it's so incredibly important as an owner or a parent that owns a business to have this conversation. So many times, I just want to say that the owners or the founders are taking all of the weight on themselves and feel like they're going to make all the decisions for their successors. And you know, your successors are adults. Typically there are sometimes 40s, 30s, 40s, even 50 years old. So this conversation that Andrea, that guide, that you, that you just mentioned, it is really powerful for people to use. So I just encourage you to go out there and just think about how to bring somebody else in in a conversation, don't carry it all yourself.

21:27  
Yeah, couldn't agree more, because the assumptions are what kill you, right? Say, assume means I make an asset of you and me, right? And I've, I can give you lots of give you lots of examples of owners that assumed that their kids were going to step in. And when they finally had that talk, you know, their, their kids said, you know, thanks, but no thanks, right? And, and unfortunately, then they had to come see me, right? Well, or fortunately, but it, yeah, it burst their bubble when they thought it was, yeah, yeah, yeah, yeah. And you always think you're, we have an owner that we worked with. And, you know, we were doing some of the compass work, and we were doing the who and and he just looked at us, and he's, he had four potential people to bring in, and he goes, What if none of them want it? But it had never crossed his mind. It was, of course, all four are going to want it. Of course, everybody's going to want to come in. It's an opportunity of a lifetime. And yeah, and so realizing that, and then having, he had the conversation and and a couple of them decided that they did not want it. So it's nice to know that upfront. If you can figure that out, the talk is a good talk to have. Yeah, it's fascinating. It's one of the things we do with our clients when they come see us, because I always say we're the, we're their last resort. If they come see me, they're, you know, we're the, we're the last resort, because they've already thought through their organization and their family, and people have either told them no, or they've thought for whatever reasons they're not a good fit. But we, we, we do a little bit of what you're talking about in terms of starting them back through, okay, let's go through, you know, your network, your people, etc, and let's talk about, what are the, what are the successful traits that are going to be necessary for your successor? So not, not anywhere near the degree you guys do. But it's, it's, it's, it's a key piece. What do you, what do you think, what do your clients find most surprising when they begin this process that they didn't know before they started?

23:35  
I think, from a successor, next gen perspective, sometimes you see your parents or the business owner being so successful, and then you get in the weeds and you're like, they're kind of just trying to figure this out too, so that, like, realization that someone you've looked up to for so much of your life is is still just a human is definitely something that can be a little a little shocking for for some successors, because you build up this picture or this story in your mind that you have to be a certain way, or you have to do a certain thing, or you have to be exactly like them. And I think there's this fundamental truth that most people want you to be happy. They want you to be authentic to yourself, and that that can be surprising for many successors. So that would be my answer for a successor. Yeah, and yeah. As far as transitioners are concerned, I think one of the things that they find is that they're, I think that their assumptions, or their perception of what they believe is possible or not possible is shifted dramatically because they actually take a deeper look at what is, what the opportunity is, and what some of the challenges are. Sometimes we build up the challenges being so big in our minds that there's just, way we can go that direction. It's just too hard. But when you really look at it, I think that they, I think that they gain a big shift in in their perception of what's possible, where the opportunity is, what the challenges are. And it really is freeing for them, because the weight is not all on their shoulders anymore. And they brought some people in again, you know, to Andrea's point, no promises, but at least working, you know, they're hearing what's happening and who might, who might want, what and how, they can then solve the problem. Because they don't understand the problem when they walk in that they clearly understand. And I, when I say problem, I think of a math problem, right? We need to solve the right problem, but if you don't understand the components, you can't solve the right problem. You just solve whatever you think. Is it that it is? So that's the big shift for them.

26:01  
Yeah, I can see that. I can see that clearly you guys really focus on relationships and communication. Do you find that a lot of times you have to really build that up in order to make the plan move forward? Or do you find that those are strong foundations that are already existing when you start? It's interesting because I think you could say it depends what we've, I think what we've found is that people who care about others and have strong values in that area, and, you know, care deeply for the business, care deeply for their community, care deeply for their employees, their vendors, their customers, their family, and they're really trying to do a good job.  
That's the foundation. And then the relationships sit there. Usually they're solid or somewhat solid. But part of the reason why I think we get people come to us, some are very forward thinking, but a majority, I would say, are starting to feel some tension. They're starting to feel some of those relationships maybe slipping a little because the successor is excited and wants more, and they're not quite ready to leave because they're afraid and they're not ready to let go. And so this tension starts to build. And then, if you're a family, it starts to show up at home, maybe with, you know, the mother or father who's not in the business, and Christmas gets a little bit tension. Yeah, there's tension there. So I think the foundation is the values and the people first concept. And we love to come in when there's a little tension, but that people are still happy and communicating. We do come in when people are not talking to each other, and those are just to give our listeners an idea,   
if you, if you ignore your transition strategy, and you let it get to where there is a lot of conflict inside of the relationships, that just adds to the time that it takes, because you have to start by repairing all those or include that in the strategy, versus just saying, Hey, We're all here together. Let's just talk about it, figure out a strategy and move forward. So it's so much easier to start and do it first, instead of wait.

28:52  
Yeah, I can see that. I can see that clearly. The reason I asked the question is because I do see how many people are surprised. And it's, it's, it always amazes me. And I always tell the clients, Elizabeth, they, you know, when people of our generation come in to see me, it's like, wait a minute, your team's already talking about this. So if they're not talking about it to you, I can tell you they're talking about it to somebody, probably in the break room, to others, right? Oh, true. So it's, it's fascinating that once that dialog begins, you know, the, it does begin to open up, and things begin to be able to flow again, because there's that tension. You can sometimes even feel it when you go into the organizations. Yeah, absolutely. Well on the team, really can feel it. I think it affects, you know, you kind of think, Oh, it's just between us. And I think, I think it really affects the team, because they can absolutely see it. Yeah, I was gonna add, I think the right strategy helps build the relationships, or solidify the relationships. Make them even deeper. And Elizabeth, in my case, there was like a baseline relationship, like we knew each other, but we were essentially building that relationship as we started talking, as the strategy was unfolding in every discussion we had about any key point or detail or what's our price going to be. How do we want to structure this? What does that look like? It helps us understand each other more, which in turn, helps build that trust, helps move that forward. So I think the process of going through creating a strategy, helps solidify that relationship any even more, because I felt seen, I felt heard, I felt respected by her, and that was a great jumping point, too. So, so don't sleep on the the power of that to help strengthen that relationship.

30:54  
Yeah, what a keen insight that is. Yeah, excellent. Thank you very much for that. All right. Well, thank you very much for sharing the tool. I think that's going to be amazing to begin to start that whole conversation, and how prescient that was for you guys to to bring that up. I haven't seen anybody else doing anything like that, so I think that'll be wonderful. Is there any other key pieces of of wisdom or advice that you'd like to share with our audience before we before we give them all your contact information and let folks know how they can reach out to you directly if they'd like to talk about this further. Well, I think in the work that I do, as you get to where you're transitioning out of your business and you become financially independent of the business, that's all wonderful, and that's all good when you get to that point. Truly, I think the things that are of the biggest value in our lives are our relationships with family and friends and people and also our health. So just I think, as you walk through this transition that you're looking at, don't underestimate the relationships, because when you get, when everything's all said and done, having those relationships intact is what's going to bring you joy once you're out of the business. Andrea. Yeah, I think for for successors, or for business owners, if you have a successor, or are thinking about successors, just don't, don't sleep on the power of just having a discussion, beginning that discussion with them, because they'll feel seen, they'll feel, they'll feel more heard, and they're going to show up better for you, so that hopefully you don't feel so alone. Well, you know, the results are in, over the 1000s of years of human existence we know conclusively that 100% of the business owners are going to leave their business either voluntarily or involuntarily at some point in time. And I think what you ladies are focused on is doing so in the best possible circumstance with the best possible outcome. So my hat's off to you. You're doing yeoman's work, and you're making a huge difference in families lives, not only today, but into the presence for their for, you know, the whole future of their family organization. So great, great stuff. How can people reach out to you guys and learn a little bit more about what you do and how to engage with you and and move forward. Yeah. So thanks again, Steve, for having us. That free resource about how to start the talk is, letstalktransition.com
forward slash IBA for Innovative Business Advisors. Otherwise, you can just reach out to Elizabeth or I through our website, which is transitionstrategist.com. We'd love to sort of talk, spend 45 minutes with you on a call, just learning about you, your business, what you're thinking about transition, to see if there's a way to help. We always say that if we don't know someone who could help, we know someone who will. There's a ton of amazing people in our circle, and we just want to see businesses transitioning and seeing those relationships stay together. So thank you, Steve, again, for having us. Yeah, thanks, Steve, so much.

34:30  
Oh, you're very welcome. You guys are the best, and we're very, very honored and pleased to be associated with you guys, and happy to point as many people as we can your way. Go out and make it a great day. We'll talk soon. Thank you. Thank you. Thank you for listening to the You Don't Know What You Don't Know podcast. We invite you to visit www.youdontknowwhatyoudontknow.com. And sign up to receive updates on upcoming episodes. You can also let us know if you'd like to be a guest or recommend a business owner to be interviewed. Find us on LinkedIn, Facebook and YouTube, where you can like, follow, share and join our efforts. Thanks for listening. We hope you join us again.