Smooth operator: How to seamlessly transition your construction company from one generation to the next

Updated Dec 19, 2013

shutterstock_65375929For the December issue of Equipment World, architect and construction attorney James K. Zahn, FAIA, FALA, Esq., of Chicago-based Sabo & Zahn, provided us with advice on steps a contractor must take when planning to sell or gift a construction business to the next generation.

Equally important, however, is ensuring the transition goes off without a hitch. Here are three of Zahn’s tips on ways to create a smooth transition.


Just because the business is transferring from one family member to another doesn’t mean someone can’t get burned. Each party involved in the sale or transfer of the firm should have its own representation for legal and financial advice. Having your own lawyer, accountant and estate planner involved in the transition will ensure professionals are looking out for your best interests. Get them on board early in the process.

Be specific

If the business is to be sold, deciding on the purchase price and payment details is only the start. If, like many family-owned businesses, you will be exiting the firm and gradually turning over control to your children, don’t leave it open-ended. Agree to a specific time period that suits everyone’s needs. The agreement should include the percentage the ownership interest will increase each month or year for the purchaser, while decreasing by the same amount for the seller.

Comfort your clients

Many construction companies have significant repeat business. Ensuring a smooth, successful transition will allay any fears your customers may have when you leave the firm. Let them know that, while you’ll be assuming a reduced role, you’ll still be involved until the new boss is up to speed. Zahn recommends a period of between one and five years. This will not only allow you to mentor your children in how the company operates, but also create a seamless handoff that will keep both existing and potential clients confident your firm is up to handling any job.