#322: How to do a Successful Family Transition with Rachel Wallis Andreasson

Ep.#8 [THEME FIVE]

You may have heard the phrase “shirtsleeves to shirtsleeves in three generations” when talking about family business and succession planning. The statistics generally back this up, given only one-third of family businesses make it through the second generation, and only 13 percent make it through the third generation (2021 HBR study). But what if that doesn’t have to be the case?

This episode is a real-life story on how Rachel Wallis Andreasson’s family business has successfully passed on their company(s) to the second–and now the third–generation.

Rachel shares how her father started the business with one gas station and what her role was in doubling the company to over 1,000 employees and multiple companies. It was not all rainbows and unicorns. There have been plenty of challenges along the way (setting up family governance, separating leadership roles from ownership roles, deciding how to handle the future direction of the company, who should be CEO, how to handle leaders who are not part of the family, how to handle leaders that ARE part of the family, what role outside advisors play, and how the equity and distributions should be handled).

This episode is a shining example for owners of family businesses (as well as non-family businesses) on how to set up your company to last generations.

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What You Will Learn

What led Rachel to rejoin the family business after working in corporate America for a while.
How Rachel’s family defined leadership and shareholder roles.
Why no family member got an elevated salary for being a “shareholder.”
The three benefits of being a shareholder in a family business.
How the family transition was handled from the first generation to the second.
The various advisors that Rachel and her family used, the roles they played, and whether she thought they were worth it or not.
Why the shift from a family business to a family run company was difficult.
Why getting an outside consultant when needed was so beneficial to growing the family business.
How Rachel and the board decided on how to reinvest and take distributions.
Why Rachel left the family business–and how they handled it–after doubling the size of the company.

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Bio:

Rachel Wallis Andreasson joined Wallis Companies in 1993 and first served on the acquisition team that doubled the size of the company. Following the acquisition, she spent a year as a territory manager and then moved into the corporate headquarters to create a training department. From there, she added human resources, information technology, recognition, and retail operations. Prior to joining Wallis, she worked at South Seas Plantation in Florida as the training coordinator. Prior to South Seas Plantation, she worked for Pepsico managing Taco Bell quick-serve restaurants in Miami.

Interview Quotes:

10:12 - “It was part of our identity. We talked about it at the dinner table. We all rolled quarters. We were all a part of the business at some point.” - Rachel Wallis Andreasson

16:03 - “I think for your own personal confidence, knowing you can go out and work for a another company–knowing how those companies operate–because if you don’t have comparisons then it’s either really good or really bad when you come back to your own family business.” - Rachel Wallis Andreasson

16:20 - “I would always strongly encourage everyone to work outside their family business.” - Rachel Wallis Andreasson

17:15 - “I would say everything in a family business is evolution.” - Rachel Wallis Andreasson

25:01 - “It does not matter if you are an active or not active in the business, you are a shareholder and this is your equity. And we have clear operating agreements: only bloodline family members are a part of the shareholder agreement.” - Rachel Wallis Andreasson

31:20 - “Dad left a great foundation for us.” - Rachel Wallis Andreasson

33:19 - “We have evolved and as the business has evolved, we evolved with a consultant that we need for what we are facing. We would not be where we are without the help of those outside people.” - Rachel Wallis Andreasson

33:36 - “Family businesses can be either your greatest pain or your greatest joy. And it’s your greatest pain when you are dealing with your mom and siblings and you don’t feel like you’re being heard and you’re not being understood and it doesn’t feel fair. That’s the worst feeling of all because this is your family and they’re supposed to be there to support you. ” - Rachel Wallis Andreasson

36:46 - “Everybody [in the family business] has a different perspective, and opinion, and experience.” - Rachel Wallis Andreasson

48:02 - “Anytime anybody transitioned [out of a business], they said, ‘Give it six months. Don’t take another commitment for six months. Figure out what you want to do, what’s going to make you happy.’” - Rachel Wallis Andreasson