CSNC EXCLUSIVE: Planning for succession success

Brent Morris, president, Gas King Oil

That was the case for Brent Morris, president of Gas King Oil in Lethbridge, Alta. Morris’ father Don had been in the bulk fuel business before the two launched their own company in 1985.

“We got along but had differing views of how we wanted to operate the business,” recalls Morris.

“My dad wasn’t interested in branding or fixing up the stores, but I wanted to renovate them and come up with a nice logo.”

In 1991, Don was diagnosed with brain cancer; he passed away the following year.

“I was running gas, my brother Kevin was running the bulk fuel business, and my mom owned both companies when my dad passed away. He was only 62 and we were all thinking, ‘What do we do?’” recalls Morris. 

“We didn’t really have a succession plan so we just kind of managed, and it went well. Kevin and I kept the businesses, and in 2000 my mom retired, so we paid her off over several years.”

Today, Morris’ son Zachary works in the family business, and he intends to have a clearer succession plan.

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“I’d advise owners to start early, find out if your child is interested in the business, and let them work for a while to gauge how they’re doing. If they’re still interested, talk to your accountant and lawyers,” he suggests.

“We’re in the process of doing that now. My son is just an employee, but over time, we might set up a trust.”

Power through common hurdles

In the 24/7 convenience and gas world, there’s rarely any down time to put towards future planning. However, carving out time is essential, Nagel warns. Otherwise, important decisions are made in times of upheaval such as the illness or death of the owner.

“Often, owners are so busy and overwhelmed with all the moving parts of the business they just think, ‘I don’t have time for this. I’ll deal with it later’, but later ends up being three, four, or five years later,” he explains.

“If Dad passes away, it thrusts Mom and kids into the position to now run this business. If they’re not equipped, this creates a lot of stress and huge financial pressure, and can result in a company going bankrupt, or getting a lot less value from a sale than if Dad had taken the appropriate steps to have a plan in place.”

Evaluate the difference between ownership and employment

Nagel often sees parents struggle to determine whether their children are qualified to take over the business.

“You can transition ownership to the kids, but that doesn’t mean you have to transition employment,” he says.

“What if the kids aren’t well-suited to be president of the company? Should you hire someone outside the family to be president while your child still owns the shares? It’s hard to say to ‘you’re not the right fit’; that’s why working with a facilitator can be helpful in overcoming the emotional side.”

Conversely, parents may draft a succession plan for their children when the best move is to sell the business outright, adds Nagel.

“This business is the parents’ dream and might not be their kids’ dream,” he explains.

“If Mom and Dad would’ve sold it and used the proceeds to help their kids fund another venture near and dear to them, maybe the family unit would’ve been much more successful. Don’t force kids to get involved because you didn’t look at any other alternatives.”