Lumbermens Merchandising highlights value of transition planning in family business with handover of HO Seiffert Lumber to a third generation; company, funded in 1892, was bought by someone outside of family in 1973 when no transition plan was in effect

Family businesses are living, breathing organizations, but what happens when there is no plan for business continuity?

The life of H.O. Seiffert Lumber Co. is an excellent case study in the value of having a plan. With no one left to inherit the business, it left the family in 1973, when Wilber Burress purchased the business. It was then passed down to his son Bill and recently to the third generation his son Nathan Burress. Even though the Burress family has built a multi-generational family business, and it is now stronger than ever, Bill would not recommend going about transition planning the way he and his father did -- without a formal plan.

“I don’t think you have a choice but to plan,” Bill says. “You have to develop a business continuity plan because you’re not going to live forever.”

Buying a Family Business

In the 1930's, Bill's father Wilber transferred to Davenport, Iowa to continue in the lumber industry. In 1961, Wilber was hired by the founding family to manage H.O. Seiffert Lumber Co. which was founded in 1892".

The last Seiffert family member passed away in 1968. With no one in the family to continue the business, Bill’s father bought H.O. Seiffert Lumber Co. in 1973, just after Bill left high school.

It was never Bill’s plan to follow his father into the business; though, that is not to say it was not an option. His father carved a path for Bill at H.O. Seiffert Lumber Company if he wanted it. And as it turned out, Bill did. The transition from Bill’s father, who was in his late fifties when he bought the business from the Seiffert family to Bill’s ownership was a decades-long, informal apprenticeship.

“I observed my dad,” Bill says. “I watched what he did and the kind of person he was. I assumed more and more responsibilities until I was running the show. The business formally passed to me in 1996 and I became the second generation in our family to own and run H.O. Seiffert Lumber Co.”

Even still, Bill did not fully intend to run the business himself. Instead, Bill searched for someone with the temperament and enthusiasm of his father to oversee the day-to-day operations so Bill could focus on land development. However, he ultimately found it hard to step away from the desk and hand over the reins.

Passing on Seiffert Building Supplies to a Third Generation

Bill and his wife Dixie owned equal majority shares of H.O. Seiffert Lumber Co. Bill did not buy his shares from his father and there was no mechanism for transferring ownership set up during their years of working together. Instead, Bill inherited his shares, but because the value was less than the lifetime exclusion in Iowa, he did not need to contend with estate taxes.

Bill has two sons of his own, and he did not expect either to join him in the running of H.O. Seiffert Lumber Co. However, his son Nathan decided to join the business in 2010, after receiving a logistics and supply chain management degree from Iowa State. Nathan learned the ropes organically and from the ground up; he started on the sales counter and worked his way horizontally across the company before climbing the ranks.

Prior to Nathan’s arrival, Bill made sure there was space for Nathan just as Bill’s father did for Bill -- just in case. However, there was no formal plan. Though, Bill did consider putting something together, and he heard presentations on the subject. Regardless of the direction his children would take, Bill knew he wanted more options than liquidation when he retired.

Beyond weighing his business continuity options, Bill also worked with a business consultant to help him improve operations and develop a business plan. The consultant did not come from the lumber and building materials industry but helped Bill’s business grow.

“He was a great help with the transition,” Bill says. “He’s been through transitioning businesses of his own and is very experienced.” The consultant is still with Seiffert Building Supplies after 17 years, and Nathan continues to lean on him for guidance.

The Next Transition

How did Bill work towards the formal transition to his son? It was slightly more formal than the way Bill inherited the business.

“We worked on a plan with a local accounting firm that has been involved in a lot of M&A activity,” Bill says. “But Nathan did all the heavy lifting.”

Together, they produced three valuations based on different metrics, and Bill created a new entity for the operating arm called Seiffert Building Supplies LLC. The operating arm’s performance at the time meant Nathan was able to buy the entity with the inventory, equipment, and furnishings from his parents.

Nathan acquired ownership of the operating entity of Seiffert Building Supplies at the start of 2022. H.O. Seiffert Lumber Co. remains, owning the land and buildings which are leased to Seiffert Building Supplies, along with other real estate and investments. Both Nathan and his brother Lee (who is not involved in the business) retain minority shares in H.O. Seiffert Lumber Co.

Since Nathan took over, he has more than exceeded Bill’s expectations for the first few years. Bill and his wife helped Nathan buy the company from them, and he paid them back in 2023, just over a year after the initial purchase.

Lessons from Two Half-Planned Transitions

What lessons would Bill pass on to Nathan and anyone else in their position?
First, he wishes he would have prepared earlier. “I wish I would have gone further into it and developed a business continuity plan to have ready to go, just in case I needed to put it into action,” Bill says. “I hope Nathan will be more formal about the process and develop a transition plan, whether he needs to use it or not.”

Another lesson he learned was the value of running the business as if you might sell it. Whether it is to the next generation or to someone else, Bill says “It is important to help the company perform in a way that would make other people want to acquire it. If you do not sell, that is okay, and if you do, then it is in good shape for someone to take over.”

Finally, Bill stresses employee engagement. Bill did not share his plans to pass the business to Nathan until Bill and Nathan started getting serious about the transition. When they did that, they brought the employees along on the journey from Bill to Nathan’s leadership. Build up the company from inside, involve and include others, and let them have some level of commitment to the company outside of profit sharing.

Thankfully, Bill says, the transition worked out well in the end. He describes it as an easy transition, in part because he did not worry about the valuation. He helped his son take on a now thriving business all while ensuring Bill and his wife had assets to live on.