In the fall of 2005, one partiuclar news article caught corporate financial advisor John Loewen’s eye.
Scanning the Globe and Mail one day, not long after Hurricane Katrina slammed into the Gulf states, he noticed a glowing profile of an intriguing Hamilton firm called Bermingham Construction; more than a century old, the family-owned company, which specialized in foundations, had been summoned to help supply massive piledrivers to the contractors rebuilding New Orleans.
But, besides helping with the disaster, the little-known firm had also won a $20-million deal with the U.S. Army and was working on large construction projects from Taipei to Boston to Vancouver.
He figured they were worth a cold call. And his timing couldn’t have been more fortuitous.
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At the time, the fourth-generation owner, Patrick Bermingham, had spent a decade rebuilding the company after reluctantly taking over from his father, C.W. He had executed a dramatic salvage job in the late 1990s, but was growing restless.
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He wanted to take some equity out of the firm, bring in partners, and get back to his original calling: sculpting. As far as Bermingham was concerned, Loewen, son of the Bay Street investment guru Chuck Loewen, seemed just the person to help him.
Despite that glowing notice in the Globe, Bermingham told Loewen the company seemed to have reached a plateau. “They had too much debt on the balance sheet and needed an equity infusion to clean it up,” recalls Loewen. The company, he added, also lacked an active board made up of independent directors, as well as a CFO who could drum up external financing.
Over the next two years, the two men set to work tidying up the balance sheet and bringing a measure of order to the company’s governance structure, for example by sourcing independent directors and instituting regular board meetings.
Loewen then started shopping the opportunity around private equity investors. Says Bermingham, “I really trusted John not to sell us on the slaughter block.”
Loewen ultimately helped see the company through two deals—one to a private equity firm, and a second, to a strategic investor—that allowed Bermingham to finally take some hard-earned cash out of the family business.
Reflecting on the Bermingham Construction story, Loewen describes Bermingham as the “poster child” for a growing category of boomer-generation entrepreneurs. They either started successful companies or inherited them, but have reached an age when they’re thinking about how to get out.
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But the question of how and when to embark on the succession strategy is hardly straightforward; after all, many entrepreneurs see themselves as indispensible to the companies they’ve built, or taken over.
And some hang on far longer than advisable. At the age when many owners figure they’re at the height of their careers, Bermingham “woke up and realized that he was an impediment to the business,” Loewen says.
“The best thing he could do was step down on a staged basis and get out.”
John Lorinc is an investigative journalist who has contributed to Toronto Life, The Globe and Mail, National Post, and Report on Business.
This article originally appeared in Canadian Capital.