October 20, 2017

She Owns It: Surviving a Succession Without a Plan

She Owns It

Portraits of women entrepreneurs.

Susan Parker (left) and Erica Rosenfeld, owners of Bari Jay.Earl Wilson/The New York Times Susan Parker (left) and Erica Rosenfeld, owners of Bari Jay.

At the most recent meeting of the She Owns It business group, the owners discussed succession planning. The topic is of particular interest to Susan Parker, owner of Bari Jay. She and her sister, Erica Rosenfeld inherited Bari Jay from their father, Bruce Cohen, who had never created a formal succession plan. In fact, neither of his daughters knew he planned to leave the company to them. “Bari Jay equaled Bruce Cohen,” Ms. Parker said.

Mr. Cohen had been running the company solo for 30 years, following the sudden death of his partner. They had had a buy-sell agreement, and Mr. Cohen bought the company from his partner’s estate. At the time, Ms. Parker said, many in the garment industry thought Bari Jay would not be able to survive because Mr. Cohen had no experience handling the back office tasks that had been his partner’s responsibility. But he quickly got up to speed.

In September 2007, the unexpected happened again. “My father left work to go get lunch and no one ever heard from him again,” Ms. Parker said. He had a massive stroke in a Japanese restaurant, and was in a coma until his death eight and a half months later.

Just before Mr. Cohen’s stroke, Bari Jay had moved production overseas. Not wanting to manage the logistics, Mr. Cohen had hired someone to handle that aspect of the business. “That was the fortunate thing — that even though my father was the name and face of Bari Jay, there was somebody there who could pick up the pieces immediately,” Ms. Parker said.

Still, she said, few realized how dire the situation was. At the company, and around the garment industry, it was assumed Mr. Cohen would soon be back at work.

“Were you working for the company at the time?” asked Beth Shaw, who owns YogaFit.

“I wasn’t,” Ms. Parker said. With the exception of a stint in the company’s customer service department while she attended business school, Ms. Parker had never worked for Bari Jay.

Mr. Cohen died in May 2008. About four months later, following a court battle with their stepmother, a judge awarded the company to Ms. Parker and her sister, in accordance with their father’s will. “We basically had like a few days to go in and start running it,” she said.

“How was the company doing financially during the time your father was away from it?” Ms. Shaw asked.

“It was in the red,” Ms. Parker said.

And there were other problems. After learning they had inherited the company, Ms. Parker and her sister offered a partnership to the employee their father had hired to handle overseas production. “We figured the company can’t survive without him, we don’t know what we’re doing,” she said.

But the employee wasn’t interested in that arrangement. “He said, ‘I will not work with little girls,’” Ms. Parker said. Instead, he hoped to take over the company and run it himself. “It got so ugly, we ended up having to lock him out of the office with armed security guards and attorneys,” she said.

“So, you didn’t only inherit a company, you inherited a company with a lot of problems,” Ms. Shaw said.

“There was a lot of baggage,” Ms. Parker acknowledged. Once again, she said, “Rumor around the garment center was that Bari Jay would no longer exist.” But the company’s accountant chuckled over the gossip. “He said, ‘Don’t let that freak you out — 30 years ago I heard the same thing when your father had the company by himself,’” Ms. Parker said.

The rocky ownership transition was not exactly a succession plan, Ms. Parker said. Noting that her father’s mother had lived into her nineties, Ms. Parker said, “I think in his mind he really was going to live forever.” That was his succession plan.

Deirdre Lord, who owns the Megawatt Hour, pointed out that he had left the company to Ms. Parker and her sister simply because it was a good asset.

“It was a really good asset,” Ms. Parker said. “But he always said, ‘I don’t want you in the industry, the industry’s changing, it’s not a good place to be.’”

“What were you doing before you worked for Bari Jay?” Ms. Shaw asked.

“I was originally a financial adviser, I left to go get my M.B.A., and then I was at Merrill Lynch,” said Ms. Parker, who worked for the firm in private wealth management. “Then I retired to be a stay-at-home mom.”

“What was your sister doing?” Ms. Shaw asked.

“She was a celebrity and movie publicist who had left to go back to school for elementary education,” Ms. Parker replied.

In future posts, we’ll discuss how Ms. Parker’s plans for Bari Jay have been shaped by her experience.

You can follow Adriana Gardella on Twitter.


This post has been revised to reflect the following correction:

Correction: July 3, 2013

A previous version of this post misspelled Erica Rosenfeld’s last name.

Article source: http://boss.blogs.nytimes.com/2013/06/25/surviving-a-succession-without-a-plan/?partner=rss&emc=rss

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