Earnhardts going through same pain as many small businesses

The battle for controlling interest in Dale Earnhardt Incorporated has been one of the major stories of this sporting season.  I feel an obligation to comment on what I see and read and hear.  I am not comfortable doing this.  I feel like I'm butting in to a family argument.

My family has owned small businesses.  My mom and dad did and I have, as well.  I have no doubt that the following statement from Dale Junior is in fact true.

"If my dad was alive, a lot of things would be different, a whole lot," Earnhardt Jr. said. "I don't like to get hypothetical. I think he would be pretty proud of what I've been able to accomplish."

When $55 million only buys you 51 percent, are we still talking about a small business?

Here's a different question surrounding the same problem.  When it only takes $55 million to buy a 51 percent controlling interest, are we talking about a big business?

This is in my opinion, a small business problem and a common one. It is a small business problem because of the small number of individuals involved.  The dollars are incidental. The problem is dealing with ownership succession.  I am not anything close to expert on this subject.  I hope that our friends, the professors at the View from here: The business of NASCAR  blog will take this story on and break it down for the lay crowd.

Matt of The Catfish Show has a take some possible outcomes of the deal. He thinks maybe this opens an opportunity for the Earnhardt sibs to partner up with a big-time investor, ala Roush-Fenway and move the team up a notch or two and obtain control.

That should be one of many interesting options for those that Dale Sr. and Theresa, together, intended the company to transfer to.  Instead, it may be one of the only ways that the children of the owners can secure what was probably intended to be theirs all along.

Here is where I get uncomfortable.  I blame this on Dale Sr. He and Theresa should have had a plan in place to deal with this possibility, and with racing drivers as we know, early, unexpected death is much more likely than your average grocery store owner. 

Succession plans are more than written agreements or statements of what the original owners or owner group intend to have happen if one or all die or are otherwise unable to function. There are many differences between these plans and a common last will and testament.  The key factor, and the one that is causing the main problem now, is that succession plans, properly executed, are FUNDED.

Whatever value that Dale Sr. and his partners would have set for the transfer of control of the company to anyone else,  presumably the Earnhardt children, would have been funded - typically by life insurance or maybe the agreed sale of certain assets.

Small business is tough.  Small family businesses are real tough. This should not be an issue and it will probably get messier before it's over.  They almost always do.

The picture is one of Rob Ijbema's great works.

Comments

[michael]

remember the good ole days when a nickle would get you a pop{soda} and gas was 37.9 a gal?? an amount such as 55 mil was something the Fed's had locked up in Fort Knox...today amounts of 100 mil of become mainstream in "Big" business America. I too grew up in family owned small businesses and I've owned one now for over 25 years. My dad gave his business lock stock and barrel to one of my younger sisters...I really think that Theresa should deeply consider what Dale Sr. would want, but her sense of entitlement is in the way and it is 2007 where a pop is now a buck and a half

[steve]

I agree with what Jeff Hammond said on our show two weeks ago, "Teresa Earnhardt is an absentee owner and that is where the problem is." The worst thing in American business is an absentee owner. Trust me on this one, I know. Teresa has tried to manage this race team from afar and she was never educated in the way that a race team has to do things day in and day out AT THE SHOP to make a winning organization. She can bottom line it all she wants, but Junior is looking to make wins not an accountant happy.

[Gvav1]

Maybe it's time for Junior to jump...