How to find a succession strategy that's right for you

About three years ago, Jeff started to consider the major existential questions that every business owner eventually confronts.

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Jeff Zachau, Zachau Construction

What should our succession strategy be? What will our future look like? What’s the best way to ensure continuity and carry forward the legacy that his father, Earle Zachau, started when he founded the company in 1969? How could the culture and team that have been so critical to Zachau’s success be preserved? What kind of company does Zachau want to become?

Ultimately, the company answered those questions in May, when Zachau Construction converted to an Employee Stock Ownership Plan (ESOP), with Spinnaker Trust serving as the trustee. Together, we worked to build an ownership structure that could position the business — and the 50 employees who are critical to its success — for a prosperous future.

ESOPs aren’t the right fit for everyone, but in the course of considering succession options, the Zachau team learned a lot of important lessons that could help any business leader. If you’re at a turning point, these considerations will help you too.

Start before you have to. It was a milestone birthday that sparked serious thinking about Jeff’s succession strategy. Once he turned 55, 65 started to feel like it was right around the corner and he wasn’t anywhere near ready to retire.

With a lot of intentional planning, there was enough runway to think through options without feeling rushed, and to get input and perspective from President Drew Wing as well as his son, Charlie Zachau, who is director of special projects. That made all the difference.

Once Jeff started to seriously consider an ESOP as an option, he had the time to talk with business leaders in other industries, engage consultants, attend ESOP conferences and learn as much as he could. The people in the ESOP community were incredibly generous with their insights, and those early conversations helped steer him in the right direction.

Engage employees early

Jeff and his leadership team told their employees about the ESOP several months before the transaction closed. During a company-wide meeting, the team shared the thinking behind the transition and created space for questions. This level of early transparency is unusual, but for Jeff, it was the right move. Zachau’s unique culture is a signature strength, and preserving it was a top priority. The input from employees during those internal conversations helped shape the final plan and, more importantly, helped build a sense of trust and shared ownership as the company navigated this major change.

Employees appreciated knowing there was a plan and valued the thoughtfulness we put into it. It gave them confidence in a shared future.

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Laura Pfeiffenberger, Spinnaker Trust

Get some outside perspective

Jeff had done some work around leadership development in the past, but when it came to the bigger questions about continuity, workforce retention, sustainability, and how to set the company up for sustainable success, he had questions. So, he brought in outside perspective.

First, he assembled a board of directors, which included Jeff and two other individuals from Zachau, plus four business leaders from outside the company with experience in board governance. They encouraged Jeff to think at a higher level about the company’s mission, vision, and values, and manage strategy and risk around those three pillars.

They were able to refer Jeff to practitioners in the industry who could help him move forward. That’s how Jeff connected with Spinnaker Trust.

As a trustee and advisor who has worked with more than 100 ESOPs throughout the region, Spinnaker guided Jeff through every phase of the ESOP process.

Ever since Jeff’s dad retired 15 years ago, he’d served as the major shareholder, the CEO, and the board all in one. Gaining the support, advice and insights from the board and the ESOP advisors was not only refreshing, but invaluable.

Tailor the process to the people

From the advisor’s side, success depends on trust and a deep understanding of a company’s goals. The most effective plans are built through collaboration. Jeff and the Zachau team were clear about their objectives and willing to engage fully in the process. That made it possible to create a structure that reflected both their needs and their values.

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