How do you say goodbye?
A business owner plans her exit
Goodbyes are hard. Business owners know that as well as anyone. Patty Seaman, president and owner of the computer consulting firm Team Technology, took five years to decide on her succession plan.
She is selling her Bellingham-based company to its employees, at 5% per year to each of the five employees. She launched the plan Jan. 1, so the transfer will be complete four years from now.
Team Technology serves as computer consultants to small- and medium-sized businesses and augments in-house information technology at larger businesses. Clients range from businesses with three workstations to corporations with 200-plus workstations in multiple states and are located from Seattle to the Aleutian Islands, with remote workers across the country. Team Technology earns more than $1 million in revenue annually. Recurring revenue for its services has more than doubled over the last three years.
“My goal was to leave this company in the best position possible for its continued success,” Seaman said. “Every single employee is equally important to this company. They all are what make it incredible.”
How did she go about it? “My recommendation is to find someone who knows the ins and outs of the process,” Seaman said. “I was lucky to have been given the advice to meet with Kirsten Barron (of Barron Quinn Blackwood, in Bellingham). She was the key to this process.”
Seaman highlighted the pluses of the plan. “All employees are being treated with the same sense of value. I think this is critical. They are being entrusted — and are trusting each other — with the future of the company. The work they put into the company to make it sustainable is in every way an investment into their futures, not only for job security in the way anyone who has worked for a small business has experienced, but for the actual value of the company related to their stake in it.
“I don’t feel like there really are any cons yet,” Seaman said. “I just need to let go.”
In this industry, most companies like Team Technology are sold to the highest bidder, and indeed Seaman received multiple offers.
“The market seems to be rapidly consolidating, which only helps to differentiate us in the long run,” Seaman said. “Maybe I am naïve. It isn’t about the money for me. I spent 18 years trying to make Team Technology the best possible place to work. Life is short. There isn’t anything more important than family and it would hurt to see that environment changed.”
What makes the transfer to employees the best solution?
“The employees. In our field,” Seaman said, “you can find brilliant people. But when you find these people and they are a joy to work with, you have a winning recipe.”
Seaman was working for another computer consulting firm in Bellingham in 2005 when the opportunity came up to buy its customer base. “I was an empty nester (my youngest had just started at Western) and was asking ‘what next?’” Seaman took it over three weeks later. Counting herself, it had three employees.
Over the years, employee numbers fluctuated depending on client needs. For the past five years, Team Technology has had the same six employees, including Seaman.
“Over the years, we grew to as many as 15 employees,” she said. “But the overhead grew also. I found the sweet spot was around 6 to 8 employees. … In 2017, our turnover dramatically stopped as our culture shifted from being metrics-based to results-based; in fact, since 2018, we’ve had no turnover whatsoever. When you find a group of professionals who are willing to be honest about their strengths and limitations, prioritize the best interests of clients, and share the burden of work as a real team does, that is the right sauce.”
Seaman herself took a circuitous route to Team Technology. She was studying natural resources management at California Polytechnic State University in the early 1970s and worked as a firefighter in 1975. “I was one of the first female wildland fire fighters that season. That was quite a difficult role to fill. Not for the work, but for the acceptance of a woman in that position. That made me question my future.
“I moved to Lake Tahoe and skied for two years, then moved to Lopez Island for four years. In 1981 I moved to Bellingham to go back to school. The task was to find a career where I could make a living in Bellingham. I ended up going to Skagit Valley College and getting a degree in computer systems technology. I was in the first graduating class for that new degree. I was hired on at Paccar Technical Center (a Mount Vernon-based company that designs and manufactures trucks such as Kenworth and Peterbilt) before I graduated.”
What advice would Seaman give to other companies considering various succession plans, including one like this? “Think long and hard about what you want. How will the employees feel? And your customers?”
With a step this momentous, you can see why five years is not too long to research, contemplate and finalize the decision.
How Team Technology is doing it
Selling your company to its key employees is no more expensive or cumbersome than to a third party, said Kirsten Barron of Barron Quinn Blackwood.
Barron, a Bellingham-based business and employment lawyer, helped Patty Seaman, president and owner of Team Technology, create her plan to transfer her company gradually to its five employees, starting now and finalizing in 2026.
That measured pace serves as an educational and acclimation period, Barron said. “Nobody gets thrown in without information or knowledge. They learn how it’s managed, what comes up every year. They practice with the current owner, making decisions.”
It’s set up so the original owner retains control while bringing new owners on board.
Step by step
First, ask your employees if they’re interested in ownership. “Identify the key people who you believe have the capacity to take on the business, and have a conversation,” Barron said.
With that affirmative, at Team Technology three things took place:
1. Seaman and Barron created a shareholders’ agreement to govern operations of the company and relationships of owners. Rather than giving each shareholder an equal vote immediately, this agreement gives each shareholder a vote equal to the percentage interest. So, if the original owner has 75% ownership, she gets a 75% vote on the board of directors. “Owners typically want to maintain control until they’re fully exited,” Barron said.
2. Seaman immediately gave a small percentage of her shares to each employee, totaling less than 5% collectively. “That creates a situation where everybody’s in,” Barron said. All employees are now shareholders, and all serve on the board of directors. It acknowledges employees’ contributions in the past and into the future, Barron said.
3. The corporation, meaning the five employees, in 2023 redeemed their first 25% of Seaman’s remaining shares. “By the end of 2026, they’ll own it entirely and (Seaman) will be entirely out,” Barron said. “I did reserve this right for Patty: Anytime she owns less than 50% of the stock, she has the right to force the corporation to buy her out entirely (making sure the purchase price is something the company can finance). Patty has the option to stay in for four years, two of which will be as a minority shareholder, or she can sell her interest to the company and say, ‘yeah, I think I’m done here.’”
Pros and cons
“Your employees likely know more about the business than a third-party buyer, which makes it more likely they’ll be successful. It’s a great way to bolster employee retention. It’s a ready exit strategy; if your employees are willing, you don’t have to go out and find a buyer,” Barron said.
Drawbacks? That depends whether the current owner wants out immediately. Barron believes this structure works better if the current owner is willing to stick around for a while.
Also, you might never know what you could’ve gotten on the open market. “Appraisals are supposed to reflect the market, but there’s always a question of whether they do,” Barron said. “If you want to get every cent out of that business, maybe this is not the path.”
“A lot of business owners don’t know how they’re going to exit,” Barron said. “Thinking about it is a good idea. Think about whether your team is a good exit strategy.
“I’d want to hire people with an ownership mentality anyway … and treat them like that.”