Sean Williams, president, and Brian Soares, vice president, First Place Rental, Oswego, Ill., still remember the day when they approached their former boss, the late Scott Munsterman, about their interest in taking over the business once he retired.
“It was about five years ago. Brian and I had talked about it among ourselves for quite some time and then came to Scott to discuss the future of the business and whether he would be interested in us moving toward purchasing,” Williams says.
“He was excited that someone had the interest and the passion to want to pursue it,” Soares says.
“I remember Scott saying, ‘Wow, this changes things,’” Williams says.
That conversation was the beginning of what was supposed to be a slow buyout on the part of Williams and Soares. “Every year we would gain an additional percentage of the business until we were the majority owners,” Williams says of the plan.
Munsterman worked side by side with Williams and Soares. “He was very open with us once we desired further involvement — showing us the P and Ls (profit-and-loss statements). He was open to our suggestions and insight, too. When you have a cabinet to help you, you can make better decisions because you have lots of viewpoints. It was nice to have a checks-and-balances system with all of us. That made for a very good opportunity for all of us to learn and see the potential,” Soares says.
“We had many years of mentorship in that aspect on top of everything else he explained and showed from a managerial standpoint,” Williams says.
The goal was set. By 2019, the process would formally begin with Williams and Soares taking their first 5 percent of ownership. The signing of the paperwork to be partial owners was scheduled to take place in December. Then life took a terrible turn.
“Scott had a heart attack in September. He spent a month in the hospital and then passed,” Williams says.
Not only were they trying to deal with the grief from losing a beloved mentor and boss, but they also were trying to figure out what their next steps were.
For the remainder of the year, Munsterman’s wife, Lisa, who had worked in the business, became 100 percent owner of the business. “She basically gave us the authority and power to run the business fully in his absence while she maintained ownership. That was the plan until we got things sorted out. This was going to last through early 2020,” Williams says.
Just when they thought they had some idea of what they were doing, the coronavirus (COVID-19) pandemic hit.
“All hell broke loose again,” Williams says. “We were taking a little bit of time after Scott’s death to kind of let things sink in with him being gone and figure out a game plan for us regarding how to tackle taking over. Then when COVID hit, that threw a whole other wrench in the mix.”
Williams and Soares dug in and brainstormed every aspect of their strategy. “We were trying to figure out how to navigate through the year, month by month,” Soares says.
As they dealt with limited work hours and people working from home, they also were trying to discern which way to turn regarding the transition. That wasn’t easy because “no one knew how the year was going to go, so it was difficult getting confirmation and details from resources we turned to about transitioning the company during this time,” Soares says.
Their business experienced a major uptick in homeowner rentals during this time, too.
“Once everyone knew they would be staying home from work, it was like a huge rush,” Williams says. “Everyone was trying to get projects done because they were home now. The majority of contractors were kind of working, but not as much as we normally would have seen due to the shutdowns.”
Going through all of this at the same time was challenging.
“It takes a very unique personality to do this. Luckily, Sean and I are both wired the same way with that,” Soares says.
“We were always looking at the big picture and figuring out the short-term details we needed to do immediately to get us to each tier until we accomplish what we are trying to do. We found that you have to analyze everything from every point of view. You need to do that for business anyway, but this was a very good way for us to grasp and understand how important that is to see the big picture and then figure out what steps we needed to take and prioritize getting to that point,” Soares adds.
They relied on the advice of their lawyer, accountant and other business owners from their ARA Peer Advisory Groups, who have gone through transitions themselves.
They also talked with Dan Crowley, founder and president, Peer Executive Groups, Coopersburg, Pa., about what they needed to consider.
“Originally the plan was to go the traditional route, such as going through the Small Business Administration. When the coronavirus hit, that changed because the banks didn’t know who will survive and what will happen. Lending changed. Banks were really picky on who they chose to lend money to,” Williams says.
Another aspect they had to figure out was what type of sale they were going to do for the business — an asset or a stock sale. “We decided to do an asset sale because it made the most sense for our business plan moving forward,” Williams says.
Williams and Soares are grateful that their employees have always been on board with the transition.
“Our employees told us they were excited and said it was like a natural progression of what would happen,” Williams says.
Soares agrees. “We have worked side by side with our employees for years. They understand that we want this to go well and thrive. They have said it is nice being purchased by someone they know and have comfort and confidence in. We weren’t brand-new or strangers to the industry. We already knew what was going on and kept everyone on when we transitioned,” he says.
Williams and Soares came up with a game plan, strategized a budget and are working closely with the owner’s widow. Those different aspects allowed them to move forward to their goal. “We are keeping the business strong and devising a way to make the payments,” Williams says, adding that he and Soares are excited that their dream is now becoming their reality.
Transitioning from employee to owner
After years of working in the rental business they love and while aspiring to take over ownership once their mentor and boss retired, Sean Williams and Brian Soares, president and vice president, respectively, of First Place Rental, Oswego, Ill., are realizing their goal. They offer the following tips for other employees who want to follow in their path.
Be willing and open to discussing the possibility with the current owner of the company. “If the current owner isn’t interested, it will never work. However, it may change the owner’s mindset like it did for us. When we both sat down with Scott [Munsterman, the late owner of the business] and told him what we were interested in doing, he said our intention changed things. He knew we were dedicated and enjoyed working here. He didn’t know until that point that this is something that we were truly interested in and that we had the same passion as he did. It changed his mind,” Williams says.
Show your ownership mentality. “Once we started talking about the possibility of taking over and having that ownership mentality, it helped in our day-to-day decision-making. Having that mentality also helped Scott see, ‘Wow, these guys have displayed this ownership mentality for quite a while.’ It wasn’t just words in passing. It was that these guys had displayed these characteristics and, when presented to him that there was something to back it up, it has substance,” Soares says.
Find the right employee partner. “Once I met Sean here, we obviously clicked personality-wise. We are both dedicated and loyal beyond reason. We are family men and look at the big picture. Once that relationship started to develop workwise, the pieces came together. We thought this could work. The key is I know my limitations. I am a detail guy. I love the operations and the physical part of it, but I knew that in order to do this, I needed to have someone to take care of the numbers and the books. I understand that, but lucky for me, Sean understands it and enjoys it. He tends to focus more ‘on’ the business, whereas I prefer the day-to-day operations of it,” Soares says.
“Brian is an outside-of-the-box thinker. I internalize everything and think about it before I make a decision. I am more of a behind-the-scenes kind of guy,” Williams adds.
Both say their unique skill sets complemented each other. Because they both had the same goal and similar temperaments of how to achieve that goal, their relationship works.
All of that “makes us really good partners — and we get along great. If it wasn’t that we look completely different, we could be brothers,” Soares says.