Preparing for Succession

LCT Staff
Posted on February 1, 2004
Lynn Sansone (middle) with her parents John and Nancy Cleveland, is president of GEM.

Lynn Sansone (middle) with her parents John and Nancy Cleveland, is president of GEM.

Lynn Sansone (middle) with her parents John and Nancy Cleveland, is president of GEM.

Lynn Sansone (middle) with her parents John and Nancy Cleveland, is president of GEM.

She started her career at 14 by washing cars for her family’s limousine business, not knowing she would some day take over the company.

Lynn Sansone, daughter John Cleveland, the founder and managing principal at GEM Transportation, assumed her new position as the president of GEM in January.

John Cleveland and his family have been planning for a business take-over for the past decade. Sansone’s family founded the St. Louis-based limousine company in 1986, which was called Admiral Limousine at the time, with a 1936 Rolls Royce, a 1934 Cadillac and two stretch Cadillacs.

GEM has since moved away from antique cars and is now focusing on the corporate and funeral market.

In May 1999, Admiral Limousine merged with Show Me Limousine to create GEM Transportation, generating annual revenue of about $2.4 million in 2003.

Since its founding, the company has grown to a 41-vehicle fleet, operating 11 stretches, 15 sedans, eight minibuses, five vans and two SUVs. Cleveland says his family started preparing for what he calls his long-range planning 10 years ago.

“I have what I call my attention span, which is about eight to 10 years,” Cleveland says.

Cleveland started planning early because he knew that after about 10 years he would want to pursue new interests, he says.

The two-fold plan consisted of an exit plan, in which he would either sell or lease the company, and a succession plan.

Although the official succession plan didn’t come into effect until spring 2003, when Sansone made her final decision to take over the company, the family has been preparing their daughter ever since they started the business.

But the question remained whether Sansone really wanted to assume the responsibility, so the family also had to take an exit plan into consideration if she didn’t.

Coming up through the business, Sansone has learned the trade and watched the ups and downs. “She’s seen the red ink just as much as the black,” Cleveland says.

To prepare for the succession they had to consider their daughter’s qualifications, Cleveland says. Sansone has been a part of the company since the beginning; she is a certified mechanic and has a bachelor’s degree in business administration.

Sansone was exposed to cars at a young age and developed an interest and aptitude for the business, Cleveland says.

“When I was really young we used to own antique cars and I was out there with my dad in the garage,” Sansone says.

But in spite of her early exposure, it was still important that Sansone spend a significant amount of time learning every aspect of the company. Cleveland put her through every function of the business.

Sansone was appointed fleet vice president in 1995 when she took on responsibilities for all the vehicles, clean-up crew, human resources and payroll.

After her decision to take over the family business was official, Sansone’s role and duties, including her compensation plan and line of credit, were discussed, approved and put in writing by the company’s board of directors. There was a short transitional period between Cleveland stepping down and Sansone taking over, in which Cleveland made sure that his daughter became familiar with her day-to-day duties.

Over the next year they will be working on giving her an equity position with the company, Cleveland says.

“Eventually we’d like to see her own at least 51% of the business.”

But even though the Cleveland family had a successor, planning for it was still a formal and time-consuming process.

Cleveland offers a few words of advice for companies looking at succession planning: “Prepare in advance for it; outline a plan and stick with it, but be prepared to make modifications and consider your alternatives.”

Another key is to let customers know that the person taking over has a similar vision and that the service levels will stay the same, Cleveland says.

“It’s important that your big customers know what’s going on and that they should have no concerns,” he emphasizes.

Cleveland says that even though he is stepping down, he will remain on the board of director’s and his wife Nancy will continue to work as office manager, reporting to Sansone.

Sansone says it is important that a successor knows and understands every part of the company. “I definitely feel that this is an advantage I have,” she says.

Sansone insists that continuing the company’s vision, such as providing the best service at the most reasonable price, is vital after taking over a company.

“Since I’ve been in it from the beginning, I want to stay with the standards that we have,” she says. “I don’t want it to lack in any area.”

Sansone says she is confident in the company’s future and she hopes to do this for the rest of her life.

“I want it to continue to grow and prosper and survive,” Sansone says. “That’s the strength I have to keep it going.”

Related Topics: family businesses, succession

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