Russ: This is PKF Texas Entrepreneur’s Playbook. I’m Russ Capper, this week’s guest host, and I’m coming to you today from the Gulf Coast Regional Family Forum and my guest is Rob Ferguson of Ferguson Interests, LLC. Rob is a business advisor for family and private equity owned businesses. Rob welcome to the Playbook.
Rob: Thank you, nice to be here Russ.
Russ: You bet. So tell us about your practice.
Rob: I help private businesses as you mentioned in your intro; these are small, middle market companies that are either family controlled or they’re private equity sponsored. And the areas that I really focus in on are strategic implementation, shareholder value and then governance and succession planning.
Russ: So how long have you been doing that?
Rob: 7 years now.
Russ: So I’m interested how you just suddenly become this advisor and expert so it must have something to do with what you did before.
Rob: That’s right. So the majority of my career has been in running businesses. I first got started off in a corporate spinoff from the Weyerhaeuser Corporation. I borrowed money from my father-in-law and four other managers and I pooled our money together, got a VC to sponsor and spun a little $30 million business out and ultimately I became the CEO, grew it, took it public; at the end, it ended up being about $450 million. Wanted to do it again but this time I wanted to get my hands on a turnaround and so I took on a turnaround CEO role for a 100-year-old, 5th generation plastic packaging company in Memphis, Tennessee.
Russ: When you say 5th generation that means it’s a family owned business.
Rob: It’s been in their family for 5 generations and I was the first non-family member to come in and run the company. It was in very difficult times and my mission was to fix it and sell it. The family – there were 17 cousins involved – was relatively dysfunctional so I did. In 2 years fixed the company, sold it and then the family was able to part ways.
Rob: While I was doing that I got invited by an Atlanta family to sit on one of their portfolio boards to help them stay connected to their investment and advise them on how their investment was behaving. And I got to know this family really well. It was also 5th generation, over 300 family shareholders were involved in that business. So it was a tale of two cities for me back then, I had the worst of times and the best of times, and that’s when I really started learning the differences and the uniquenesses of family businesses versus maybe a private equity sponsored business or a Fortune 500 public company.
Rob: And I fell in love with it and I started getting referrals from this family in Atlanta and I’ve never looked back. I’ve been helping family businesses now for 7 years.
Russ: Wow. Now from what I know 5th generation is pretty unique and a lot of them don’t make it to the 5th, right?
Rob: Yeah, that’s right. The way it works is that the statistics are going from 1st to 2nd you only have about a 30% success rate, and then going from 2nd to 3rd it’s probably around 12% and then if you get to 4th or 5th it’s less than 3%. So getting to that 5th generation is certainly very, very special.
Russ: Wow. And so you’ll do a private equity funded business as well as a family owned business?
Rob: Yes, I will.
Russ: They’ve got to be pretty different then.
Rob: Oh they’re very different, yes. The differences are that I see family businesses, they’re long term investors and they’re more interested in being resilient; it’s about perpetuating their legacy. Whereas when you’re with a private equity sponsored group it’s more about we got 5 years, we got 7 years and we have to get this thing turned. And so they’re going to maybe take more risks to get that quicker return and families are going to take less risk. In fact, they’re comfortable with an investment or an acquisition not really panning out because they see it strategically fitting 10 years down the road; whereas a private equity firm that acquisition better be accretive very quickly.
Russ: So from your perspective do you prefer one over the other?
Rob: No, they’re different. What I enjoy is the family dynamics; I’m able to help families in ways greater than just business. I was talking to a young lady out here, she was giving me her story about her dad’s 72 years old and she and her brother are in the business and it’s time for Dad to let go and he’s having a hard time doing that. And of course, it’s hard because what’s he going to do? And so I think our senior citizens, particularly our senior leaders, they need to always have a purpose in life and these senior citizens that are business leaders have huge gifts and talents that they don’t really know where else they can leverage that. So I come in and help these patriarchs find where they can donate, where they can actually make money, whatever they want to do but where they can give from a servant perspective their time and gifts and so it’s a lot of fun.
Russ: So when you go back and look at the companies that you’ve run that got turned around and what you do now, it seems like you just have an incredible record for making things happen; for making business happen. What is it? What do you see and what are you able to do that the person you replaced wasn’t able to do or what a lot of operators can’t make happen?
Rob: When I look back on my career my personality type is I’m a high achiever, that’s the good news. The bad news is I’m a high achiever if you understand what I mean. Sometimes I achieve those results but it comes with a cost and I’ve learned that over the time. Having that kind of an approach to a turnaround situation is something that’s imperative. And not being a family member helped me have an objective point of view and there were zero sacred cows. I think the first – no, the third day I was there all the family members but one were terminated by me, so there literally were no sacred cows. So I think that gift has been able to now help me be more of a catalyst. Instead of a high achiever now I’m working with and through the leadership of those organizations and teaching them how to turn around their business or how to grow their business.
Russ: Okay. So I’m just curious before I let you go, say an opportunity was presented to you and it was an opportunity where you would be the leader, period, end of a sentence, and have some sort of huge equity position – meaning what you did before you got into – would you do it?
Rob: I sure would be tempted but I’m not sure if I would. I sacrificed a lot to do what I did. I commuted 15 consecutive years, I was on the road probably 11 months out of the year to be able to follow my career and my wife was very supportive, so was my family; so I have a different lifestyle now. I would definitely think about it; I’d be tempted. Thank you so much.
Russ: All right. Rob, I really appreciate you sharing your perspective with us.
Rob: Okay, thank you.
Russ: You bet. And that wraps up my discussion with Rob Ferguson. And this has been another Thought Leader Production brought to you by PKF Texas Entrepreneur’s Playbook.