Ewen Morrison wasn’t sure what to expect from the first formal board meeting of EMW Industrial scheduled for Dec. 16.
“It used to be my wife and I at the kitchen table,” he said.
But earlier this month they announced that 15 of their employees had purchased 48 percent of the Saltcoats, Sask., company.
“There will possibly be 15 new ideas on how to do things,” he said.
The transaction is described as a management buy-in, rather than a buy-out, although the new owners contributed only a small amount of money to the deal.
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Morrison, who built EMW over the last 35 years, will get his money from future profits.
The company performs maintenance on grain elevators, fertilizer facilities and potash mines. It also does repair work and structural fabrication, and supplies parts for and overhauls grain cleaners.
“Seventy-five percent of our business is in the agri end,” Morrison said.
The company has grown to do $15 million in business each year and employ more than 100 people in the three prairie provinces, with offices in Winnipeg, Regina and Saskatoon.
The Regina office has just opened and will house consulting, design and engineering services.
Morrison said he began considering about three years ago how to take the business he had built to another level while easing himself out.
“I spent quite a bit of time thinking about how to do it,” he said. “We could have gone the Westjet way (where every employee owns a small share), this way or sell out. I didn’t want to walk away.”
He sought help from a consultant, who examined how the business worked and what positions might lead to ownership. They also looked at the value to new owners in terms of role and responsibility and what percentage of the company each should own.
“I tried not to put names to it,” Morrison said. “We looked at what’s it going to take to keep the company going and growing with that same thought process and values I have.”
In the end, the correct number was set at 15.
The new owners are Jeff Becker, Garnet Bjornerud, Alan Brenner, Dustin Brears, Jordan Bugg, Derek Good, Ben Hutchings, Trevor Mack, Chris Morrison, Justin Morrison, Ken Morrison, Patrick Morrison, Rob Myron, Heather Taylor and Jason Trowell.
The Morrisons on that list include Ewen’s brother and three nephews.
Each owns three percent of the company except Ken Morrison, who got six percent in recognition of long service and loyalty to his brother.
The agreement froze the company’s asset value and transferred it to a preferred share, said Phil Symchych, the consultant who helped Morrison. Symchych is president of Symchych Consulting and part-time chief financial officer of EMW.
Morrison and his wife, Shirley, can redeem those shares in the future from excess cash, subject to lending covenants, he said.
“We all have to work hard,” Morrison said. “Nothing’s changing.”
Heather Taylor, EMW’s assistant manager of administration and finance, said it was an easy decision to buy in and she likely would have invested more money if that had been a requirement.
“I fully believed in the business,” she said. “There is going to be time and commitment required, and stress and responsibility taken off Ewen’s shoulders.”
That’s a key component of a succession plan such as this, Symchych added.
Continuing owner involvement and a management team that is familiar with the business and customers are positive attributes of the plan. This type of buyer doesn’t usually have pockets as deep as those that buy companies out, but they do have expertise, he said.
The main negative is that the owners don’t get their money right away. They assume the risk that they originally accepted as entrepreneurs – that the company won’t make enough money to pay them out.
And, they have to learn to step aside while the new managers learn to be owners.
Succession at all businesses needs to happen in both ownership and management.
“Ewen has accomplished both in one fell swoop,” Symchych said.
Since the announcement, Morrison has heard from employees who were hurt that they weren’t among the 15.
“I’d be disappointed if some weren’t,” he said. “They are the hardest working people I know and they care about the company and they care about me.
“I had some really tough decisions to make.”
There could be opportunities for some of them to buy in later. The group of 15 has first option on the Morrisons’ 52 percent.
Morrison said now that everything is completed he can look back and see a few things he would do differently. The main thing is getting help from consultants sooner.
“I’m a coverall guy. When it comes to developing a succession plan, I didn’t have a clue what I was doing and it took about a year to get that through my thick head.”
Morrison added he will stay on as CEO and general manager and leave when he’s ready.
“I’m still really enjoying the work,” he said.
