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 (See Blog Post: Searching with a Partner, or not!) 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. 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 work-life balance and 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 historically been confined to self-funded searches and was 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 case study, searched in 2000 and purchased Molded Dimensions in 2001, which was documented again in a disguised case in 2013 as Elasto-Therm.
However, more recently, Trish Higgins with her husband James Higgins and his brother Palmer at Chenmark, initially acquired a property maintenance business in Maine in 2015 and have made multiple acquisitions since then. Trish says ” We felt that owners would better relate to the ‘family’ aspect search as a better way to connect with them” like many self-funded searchers, she launched mid-career (See Blog Post: Searching Mid-Career). Both the Katz’s and Stevenson’s also embarked on their self-funded searches 6-years after B-School, both having just started a family.
More recently, many have been supported by investors from the traditionally funded-search model. Still, 85% 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, Ross, Kellogg, IESE, INSEAD and Ivey. Their backgrounds range from consulting, operations, private equity, and investment banking to startups. Half searched outside of the USA (See Blog Post: Searching Internationally), one in Canada, another in Brazil and 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 report by the 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”. Courtney and Jonathan Dunn boldly declare themselves as a “dynamic husband and wife TEAM!” at Beachton Capital.
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 partner searches indicated some investor caution and a higher percentage of investors in the funded 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, “to 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,” advise Enrico Magnani and Patricia Riopel of Magnum Capital. Another 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.”
Another couple reported, “It is clearly important to establish with investors whether they are supportive (or not) of spousal partners before raising any money; however, it is also critical to have this conversation with investors if your spouse joins you after you’ve acquired a business. Some investors may be in favor of this because they view it as a ‘two-for-one’ deal. We found another couple who reported that their investors stalled compensation negotiations for the spouse who joined the company for over a year before formally agreeing to a separate salary. Some investors may simply try to get entrepreneurs to over-sacrifice if the relationship is informal and amicable or if they believe that the entrepreneurial couple is too busy running the business and raising a family to push the issue.”
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 workplaces and had time to assess each other’s style and could be honest with each other about our interests and abilities. Not surprisingly many searcher 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 to 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 and 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 teamwork.”
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) since Linda had all the equity, “It is another check in a box that a 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. 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.”
Taking a different approach, Carolina Carrillo Alvarez of Lea Transmission in France said, “I was pregnant during the search phase, so Bruno took the lead with my supporting the process behind the scenes. We were worried that the stress of search may have made my pregnancy with our first child difficult. The closing was just crazy stressful and most of it fell on Bruno’s shoulders. Only 6 months after closing I joined him at the business as Head of Management Control. Not all sellers would have been supportive of two of us as partners buying the business, but when we felt it might work, I was introduced in the process”. Bruno Lea reflected, “Carolina was very open to living anywhere I found a business in France, this was a great relief to me in the search process. We had also agreed that if the business could not support a position for her, that she would take a full-time job elsewhere. Now that Carolina is in the business with me, we are aligned in our career goals and expectations. My investors have been very supportive of her being in the business they invested in.”
Couples may also want to think about what will happen if one of them wishes to leave the business out of their own volition–not simply because the business cannot support the added salary. Couples may also get this question from their investors, “Will the other stay or will the other leave, too? While the answer may vary among couples, it is helpful to have these discussions before the issues actually arise,” reports another couple.
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”.
Being prepared for some alternative outcomes was advised by Patricia Barbosa and Lucas Correa at Horizonte Capital in Brazil, “Something that we did and thought it was very important for both of us before starting the fundraising was to discuss if we realized on the way that working together is not ending up well; who will continue the search and who will drop? What will be the Plan B for the person that would leave? Or, have discussions around roles and responsibilities, each persons strengths and weaknesses, and expectation regarding each other’s work habits. These conversations will bring additional clarity to the challenges you may face during the search because it helps to eliminate wrong assumptions or bring to light assumptions that were not anticipated. ”
And while one spouse may offer regular emotional support to the other (and vice versa), it is also critical to establish a support system outside of the home, especially since both members of the couple share virtually every waking moment together. A couple commented, “You run the risk of creating an echo chamber, and it’s important to have close family, friends, and potentially a therapist nearby. In some cases, both you and your spouse may experience an emotional low at the same time, and this is challenging. It’s easier for the couple to pull out of a low point without any external help if one spouse is on an emotional high, but not when both are feeling down.”
Simone and Malcolm Collins found that “We split responsibilities based on our own personal strengths and weaknesses. One of us did all outreach emails, drip campaigns and calls; the other managed all outsourced work, interns, list building, timetables, and high-level strategy. Both of us were involved in due diligence, while one of us focused on determining which questions to ask while the other did 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 pointed out, “Having fun working together and taking advantage of the perks and the benefits of being 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.”
Carolina Carrillo Alvarez Carolina stressed the importance of clarified roles, “We both have very separate responsibilities – Bruno handles sales and operations and I take care of the financial side of the business and our desks are widely separated in the office. It has felt really good to see my daily efforts with receivables collection improve our cash position significantly after I arrived. We do eat lunch together which I bring from home for us.”
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 workday 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 had better connections in the Canadian business world so took care of the brokers/intermediary network. Patricia has run business operations and took care of the search fund operational aspect. With my analytical skills, I took care of the financial modelling while Patricia ensures the accounting of the companies we analyzed were clean utilizing her financial skills.”
The Katz’s, the Britcher’s and Bruno Lea had children while they were searching. Both used a mix of family, day care and personal engagement. In my own case, 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 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. We split the responsibilities based upon our skills – Mike did more of the outreach and getting the funnel filled and I did a good job of once we had a business on the line, looking at the business opportunity as would we ‘like’ to do the work on it, but not how good a ‘deal’ it was.”
“Despite how much time we spend together at work, we find that it still carries over a little too much at work. As our two children grow up, we will have to leave more of those discussions back at the office.” says Carolina Carrillo Alvarez.
Enrico Magnani and Patricia Riopel who shared equity equally, warned, “Don’t contradict each other in front of employees or investors. Instead, communicate regularly with each other, debate ferociously (be sure that you have the ability to not take it personally) and align yourselves in private. Then, present a united voice.” Debby and I found that employees and interns became very uncomfortable if your disagreements 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 well for us – we could not separate out work and home enough with a home office, so during the search we rented an office from a friend with internet, receptionist and desks. Also, there was a period of time that we did not allow for the right balance of time to our family – things fell through the cracks. We had to create ways to turn work off when we got home. It can be all consuming and not productive to be living with the person you work with most closely. Over time we learned to have “honest conversations” and had to say, ‘I’m not happy with this such and such aspect of our work/life/marriage and be able to talk it through together.”
Ivona and Corbin Butcher found, “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, would not burden the other outside of business hours.” On the other hand, Simone and Malcolm Collins experienced, “We have no work/life separation, which means we were pretty much searching 24/7, and yet we don’t feel as though we were ever really working, because we got to spend quality time together doing something we loved.” What is important is having alignment in what feels right to each of you.
Lucas and Patricia in Brazil, reflected that “Make sure to add some family time on your routine that will push you both to disconnect from the Search Fund and live your lives as a couple. Establish some boundaries around discussing the search fund. But if inevitable, asking ‘would it be ok for you if we discuss something about the search now?’ always helps.”
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 two decades 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.”
Patricia Riopel advises, “Understand that even if you work together, this is not a family business where you only have to answer to each other. You still have investors to answer to and you must make sure that they see the value of having each of you on the team. And, if you want kids, you need a good plan and strategy for how you will attempt ‘do it all’ together”.
Advising other EtA searchers contemplating this dual career path, Bruno Lea says “You need to be very self-aware and know if you really want it. It is your responsibility to know when you are ready and know enough about who you are and ready to see opportunities and experience a lot of failure along the way. I knew it would be very difficult. I was ready to suffer as less as possible, but as much as needed. It has been beyond my dreams. I never imagined I would end up with a great company, working alongside my wife, with 2 children at home despite the challenges of the pandemic and feeling so good about it.”
Trish Higgins reflected that “Searching and operating together just made sense to us, and wasn’t something we spent a huge amount of time worrying about. Despite that, we spent a good amount of time before officially launching talking about the dynamics of working with each other. We always say, ‘family first’ – and don’t do anything that would jeopardize that.” In my own case, working together with Debby for 20 years was one of the best professional and personal decisions we have made, despite the advice from my advisory board that it would be my first “big mistake”. They could just not see it working for them; which was actually not relevant to our own decision!
It takes effort, as do all relationships, to work together as a couple but can be 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 written blog comments below. 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 www.steinsharpe.com website.
Created: 03/01/2017, Last Revised: 02/24/2021