Searching as a Couple
Husband-and-wife teams searching for, purchasing and then running a business, is a special variation on selecting a partner for a search. Searching with a partner is one of the key decisions a searcher must make before heading down the path to leading a company as CEO for a decade or more. Under the best circumstances, searching with your spouse can create a fulfilling career and a very strong work/life balance – for both of you.
In my own case, Debby joined me as CFO a year after I purchased my search company and we worked together for 20 years. I could think of no better partner to have along the journey as an operating CEO. While it is not a viable choice for most couples, it is worth examining some examples of searchers who have attained the magic of 1+1=3 that an ideal spousal business partnership can deliver. So, why don’t more searchers pair up with their spouse to search and operate a business?
Historical and current trends
Searching as a couple, or operating as a couple after search has been confined to self-funded searches and is not very common. Only a few are documented in case studies, including Larry and Pamela Stevenson in Pathfinder, searching in 1993 and purchasing SmithBooks in 1994 along with a third partner Harry Yanowitz. Linda and Mike Katz, the subject of another HBS case study, searched in 2000 and purchased Molded Dimensions in 2001, which was documented again in a disguised case in 2013 as Elasto-Therm.
More recently, Trish Higgins with her husband James Higgins and his brother Palmer, acquired two property maintenance businesses in Maine in 2015 and 2017. Like many self-funded searches, many occur mid-career and go un-reported. Both the Katz’s and Stevenson’s embarked on their self-funded searches 6-years after B-School, both having just started a family.
In a snapshot taken in early 2017, there are five couples searching and one raising, and all are using the traditionally funded-search model. Five of the six did not start their search immediately after graduating, waiting an average of 4.8 years, with Sarah Rowell and Scott Mackenzie outliers at Ridgeway Growth Capital initiating their search 12-years after getting their MBA’s.
More than half of these searchers met while getting their MBA degrees together, and all but one of the partners have an MBA from GSB, Kellogg, IESE and Ivey. Their backgrounds mirror the Stanford studies on previous experience, ranging from consulting, private equity, and investment banking to startups. Three are searching outside of the US, one in Canada and the other two in Europe.
According to the Small Business Association (SBA), 35% of family-owned businesses in the USA are run by husband/wife teams. With the generational increase in focus on work/life balance and more women graduating with MBA’s, the increase in couples searching is inevitable. Overall, “Copreneurial” teams experience greater income gains and are more productive than solo entrepreneurs, as cited in Entrepreneurial Couples. Institute for Labor Study (IZA), by Peter Thompson, Emory University, et al. May 2014. But, it does not come without risk – placing all income/investment in one business, coupled with potential bias from sellers, brokers, investors, bankers, customers, vendors and even employees. Gender roles complicate things, as described by Nicole Torres in an HBR article “Should Couples Go into Business Together?” in July, 2014.
The searchers surveyed highlighted their decision to search as husband-and-wife teams by featuring their challenges up front. Corbin and Ivona Butcher described themselves as a “Copreneurial” opportunity at Continuum while searching in the Czech Republic. Brittany (Dreibelbis) Collins and Miles Collins highlight themselves at West Sands Partners as a “Family of Entrepreneurs” while Sarah Rowell and Scott Mackenzie at Ridgeway Growth Capital simply refer to themselves as a “wife and husband team”.
Is there a penalty for “spousal partner searches”? Simone and Malcolm Collins at Collins Family Ventures encountered some resistance, “Because married couples are not yet proven in the search fund realm, some investors are nervous about working with them. We understand their concern given how common failed relationships are in the baby boomer generation.” The aforementioned six partner searches indicated some investor caution and a higher percentage of investors in these searches committed only to ½ units instead of full units.
Corbin and Ivona Butcher drove at this head-on during their fundraising discussions, “We tried to diffuse this with a mixture of candor and research, but marriage risk is a persistent heuristic bias.” Another couple recommended, “Meet potential investors in person…always together!!! We managed to get the commitment of an investor, who was not fan of a ‘business couple’ but admitted after having spent 90-minutes with us that he got the profound conviction that we were destined to work out together”. “Some investors simply think it is too risky to invest in a couple and there is nothing you can do about that. Best to just focus on others for whom this is not a problem.” advises Enrico Magnani and Patricia Riopel of Magnunm Capital. One couple simply states, “Go for it!! 9 out 10 investors like to trust a couple! They really think it is a very solid and effective way to make a search successful.”
How couples think about their choice
Many of these couples felt that their choice of a life partner was much more rigorous than finding a working partner. Ivona and Corbin Butcher said, “Naturally a spouse should be strictly better than a random acquaintance who happened to attend business school the same year you did and shares your interest in search funds. We have our whole lives to find and secure a marriage partner and only a year or so to secure a search partner.”
Simone and Malcolm Collins compared their future with their business to the challenges of raising a family. “Do people think that spending their life and raising their children with someone is going to be significantly easier and less riddled with conflict than running a company? Why marry someone if they don’t make you more productive? Why marry someone if you don’t enjoy working on projects together… isn’t that most of life?”.
Another couple focuses on the trade-offs of more traditional dual-career paths, saying, “With constraints like travelling, long hours, each one in different companies, sometimes having to choose which career to support the most doing a search together gives a degree of autonomy, a possibility of a balanced family life, and provides this incredible feeling of building something together as a business that would appear as a family business even if you don’t own 51% of share…and this is luxury today!”
As with many other relationships, trust and respect are at the core principles of these couples. As Enrico Magnani and Patricia Riopel describe it, “Working together is not for everyone. You need to know each other well beforehand, including each other’s working habits and strengths/weaknesses. Fundamentally, each of us must have a high level of professional commitment and trust in the other for the professional partnership to work out. We trust each other’s work and each of us believes that the other was the best partner we could have for this journey.”
Both Mike and Linda Katz and Debby and I met at work and had time to assess each other’s style and could be honest with each other about our interests and abilities. Not surprisingly many of these couples met while at a MBA program where many skillsets could be observed and conflict resolution styles evaluated. Corbin and Ivona Butcher suggest a way evaluate this, “Use other common tasks like household management, laundry, dishes, paying the bills, investment decisions, meal preparation, travel planning and socializing as proxies for how you will work together. If you can practice these domestic tests without having gender-based roles or imbalance, you can look critically at how to segregate your roles and responsibilities in the business.”
As with other non-solo searchers, couples can benefit from their complimentary skills, capabilities and goals. Enrico Magnani and Patricia Riopel suggest that “The whole household is working towards the same objective, there is no issue in negotiating free/working time or with regards to the potential geographic re-location (we do not have significant others with careers to consider).”
Economics may work out more favorably, as pointed out by Corbin and Ivona, “We simply need fewer resources to continue a search than a traditional partnership would, and have all the output benefits of team work.”
Dealing with perceptions and bias from sellers
Many of the searchers report as Mike and Linda Katz found, “Mostly owners were intrigued about working with one’s spouse. 99% say ‘I could never do that’, however even back in 2001, we never had any gender bias.” The Katz’s also discovered the advantage of being identified as a Woman Owned Business (WoB), “It is another check in a box that a multinational customer can put on their list for us as a supplier. We are being chosen because we are a good supplier, not because of WOB – it doesn’t hurt, though. As Mike’s grandmother would say when she would look at the clutter in her house – ‘it doesn’t eat, so it doesn’t hurt’. When it comes to providing a Personal Guarantee on a loan, be prepared for the two of you to sign personally!”
Some sellers may be familiar with the couple dynamic and are already working together with their own spouse. About a third of the roughly 4-million family-owned businesses in the U.S. are being run by a husband-and-wife team, according to recent data from the Bureau of Labor Statistics. This is a positive characteristic for a seller who may be attracted to the search model when negotiating with a married couple. Corbin and Inova Butcher felt that “Presenting a truly “family” solution to succession adds to trust, credibility, and dedication.”
Enrico Magnani and Patricia Riopel suggest, “Disclose that you are a couple from the beginning. This gets the awkwardness out of the way, and investors, bankers, brokers, lawyers and business owners can focus on your merits as two professionals. You will know when they are uncomfortable and there is nothing you can do about that. It is best to focus on others for whom this is not a problem.”
What makes it work well?
Recognize that once headed down this path, it will be very difficult to separate work from family time; get used to it. One search couple pointed out that “It will be impossible to balance evenly both professional and personal life. You will need to take the required actions, on regular basis, to be sure your partner is still very aligned with you. Be ready to sacrifice for the right reasons when needed, but also confirming regularly that this adventure is a common choice, a family choice for the right reasons. You have to keep the flame of adventure alive, and make sure to concretely maintain it by keeping unique and fabulous to do it together”.
Simone and Malcolm Collins found that “We split responsibilities based on our personal strengths and weaknesses. One of us does all outreach emails, drip campaigns and calls; the other manages all outsourced work, interns, list building, timetables, and high-level strategy. Both of us are involved in due diligence, but one of us focuses on determining which questions to ask while the other does all the fact finding.”
Giving yourself permission to enjoy the process and take care of your relationship during the search process and while running the business is important. Enrico Magnani and Patricia Riopel point out that “Have fun working together and take advantage of the perks and the benefits of working together as a couple is important for sanity. For instance, if we must travel on the weekends for work, we’ll make a date out of our evenings and be sure to treat ourselves to a good meal and glass of wine.”
Simone and Malcolm found ways to support each other on a personal basis, “The great thing about working together is that it expands the reach of things you can split among your responsibilities. As example, one of us may encourage the other to work-out or clean the car while the other seamlessly picks up the slack in the day’s workload with the knowledge that such tasks are bettering us as a unit. Conversely, neither of us would ever feel resentment if we were told that the other had to cancel something fun to get some work done, as we both ultimately benefit from said work.”
Linda and Mike Katz went so far to swap positions as CEO when Mike spent full time with their children at home. They carefully defined roles both at the office and at home and explained, “Clear lines of responsibility and rules both at work and at home. We went through a spell when we both worked three days per week and overlapped responsibilities and then data dumped at home; the work day never ends. So, we created a rule that if it can wait, we only talk about work after the kids have gone to sleep. When we both work, she is more focused inside the four walls and I am outside the four walls. This fits our strengths. At home, we drilled it down to little things like I was responsible for the kids shoes at home (are they growing out of them, do they need new cleats, etc.). At work, Linda was responsible for our chief staff reviews and structure of measures, projects, and behaviors.”
“The split of the operational activities is done based on our strengths” says Enrico at Magnum Capital. “Patricia is bilingual while my French is not great so she deals with prospects in Quebec while I handle owners in English-speaking Canada. I take care of the proprietary search process and the interns, which I ran as a consultant team leader. As a Canadian, Patricia has better connection in the Canadian business world so takes care of the brokers/intermediary network. Patricia has run business operations and takes care of the search fund operational aspect. With my analytical skills, I take care of the financial modelling while Patricia ensures the accounting of the companies we analyze are clean utilizing her financial skills.”
The Katz’s and the Britcher’s had children while they were searching. Both used a mix of family, day care and personal engagement. I changed diapers for our second son who spent his first six months in Debby’s office before he moved on to full time family day care.
Finding time to communicate with each other is very important. Some couples set aside time for a coffee at the beginning of each day or for a daily lunch. Debby and I regularly postponed conversations until our nightly trip to the hot tub to be sure we covered both work and personal issues. Calendar planning on Sunday night works well for some or shared calendars with both partners visible helps with planning coordination.
What does not work well
“Absolute equality is a noble idea, but an ineffective governing structure. Have a clear chain of command to prevent an impasse from impeding progress. Governing structures require a hierarchy that can be exercised without ill will.”, say Simone and Malcolm Collins. Linda and Mike Katz cautioned, “As much as you can stay out of each other’s sandbox – be a sounding board but let the other person do their thing. Separate the roles based on strengths.”
Enrico Magnani and Patricia Riopel found that “Don’t shy away from healthy debates (and be sure that you have the ability to not take it personally).” However, Debby and I found that employees, outsiders and interns became very uncomfortable if these debates deteriorate into non-professional remarks and criticism. Save the disputes for when you are at home, not in the office.
During the search, Mike and Linda Katz found that for them, “Working from home just did not work – we could not separate out work and home enough with a home office, so mid-stream we rented an office from a friend with internet, receptionist and desks.”
“At some point, we decided we needed to have designated working hours and family hours. We just could not be ‘on’ all the time. Of course, if one of us needs to take care of some business-related item, we are free to do that individually – but for normal course business, won’t burden the other outside of business hours.” Ivona and Corbin Butcher found. On the other hand, Simone and Malcolm Collins experienced “We have no work/life separation, which means we are pretty much searching 24/7, and yet we don’t feel as though we are ever really working, because we get to spend quality time together doing something we love.” What is important is having alignment in what feels right to each of you.
While searching as a couple may not be right for many, if it feels right to you, these examples are useful for testing your own assumptions. As Linda and Mike Katz pass along, “These last 16 years has been rewarding in so many ways and it is very exciting and comforting to share the ups and the downs with a spouse as long as you know that the ride is unpredictable.” In my own case, working together with my spouse for 20 years was one of the best professional and personal decisions we have made, despite the advice from my first advisory board that it would be my first “big mistake”. They could just not see it working for them; which was not relevant to our own decision!
It takes effort, as do all relationships, to work together as a couple but is worth the long-term rewards and sense of accomplishment despite the added risk. Searching couples are not out looking for a “lifestyle” business, but to share the joys of personal, family and professional life together.
Feel free to share some of your own best practices or experiences in dealing with these issues in writing a blog comments. I encourage this dialog, allowing all to learn from both my views and the views of others – a virtuous learning cycle. Jump right in! Also, I frequently update individual blog posts, add to the Reference section and Search tips, so visit the website regularly.