The Next Act: Completing careful successions

Two BC&E member companies – North Point Builders and Oak Contracting, LLC – started the new year under a new generation of leadership. Succession planning for any company is enormously challenging. The successful successions at North Point and Oak offer some insights on what it takes to get it right.

North Point Builders
After 35 years in business, nearly four years of succession planning and countless early morning talks, North Point Builders Founder and CEO Ken Wingate has handed off the role of company president to James Nicosia.

“This transition has been happening for a year already,” Nicosia said. “It was not a flip of a switch and changing things overnight. We have been very intentional to work things out over time, decide how our roles would change and identify the leadership team that I would need to build around me to ensure the company remains successful.”

Working from a spreadsheet dated January 1, 2022, the two executives gradually shifted responsibilities, advanced plans to cultivate next-generation leaders and consulted internal team members and external advisors (including the Vistage, a CEO coaching and peer advisory organization) in order to refine the transition.

“When you are the executive handing off responsibilities, you have to feel comfortable,” said Wingate. “This has been a really positive process. Jim has his new role under control and he embodies two of the most important characteristics that I wanted in this transition – honesty and integrity.”

“My duty and goal are to build on the legacy and the foundation of success that Ken has created here,” Nicosia said. “I take that responsibility very seriously and I am honored to be part of it.”

The successful transition, Wingate said, will position North Point to thrive long term.

“For any company to survive, it has to continue to grow, to mature and to become better at what we do. We need our young folks to be a major part of that movement because they are the future,” Wingate said. “Jim and I are really strong on supporting that. Our mission is to create a company that can continually grow and continually replace the top executives with younger people who are being seasoned as we speak.”

Wingate will continue to be involved in business development and strategic planning for the company and occasionally check in on a North Point construction site.

“I am hoping to reduce my hours and do a little more fishing,” he said. “But I love the construction industry and support it for a decent way to make a living. I celebrate the craftsman that use their hands to create the facilities that we and our fellow competitors build. Our industry creates something from nothing. It is amazing what these folks in the field do. I respect the work of the designers and developers, but where the magic happens is in the dirt at the job site.”

Oak Contracting, LLC
From his new position behind the president’s desk at Oak Contracting, Jonathan Goetz has already absorbed one huge piece of business intelligence: A succession can be amiable, long-planned and successful — and still be very hard.

For a year and a half, Goetz and his partners, David Toth and Chris Marschhauser, held ongoing and wide-ranging talks with Oak’s owners to craft their succession plan. Long-time Oak employees, the trio understood the company’s strengths, valued its culture and were excited to continue its growth.

In the last quarter of 2023, however, a hard financial reality became an unavoidable focus.

“In the last couple of years, the construction market has shifted from construction manager as agent which requires no bond, to construction manager at risk or general contracting, which require bonds,” Goetz said.

“The succession deal had to be structured in a way that wasn’t taking equity out of the company so that we could maintain our bonding program and proceed with business as usual from December 31st to January 1st.”

Crafting that deal, however, would require Goetz and the other incoming and outgoing owners to spend inordinate amounts of time with accountants, lawyers and in negotiations. The process required some difficult conversations and a resolve to talk, listen and compromise during negotiations in order to reach a “good deal.”

“My accountants always told me that a good deal is one where both parties sign but both parties are a little uncomfortable,” he said.

Ultimately, the deal underwent a “tremendous change” and wasn’t signed until December 29th – two days before the succession would happen.

“But it was all for the betterment of the company,” Goetz said.

All parties concluded the process on good terms, despite a little discomfort, and Oak Contracting retained the bonding capacity to continue its work and move forward with growing the company, Goetz said.

The three new owners structured their leadership team to keep overhead down, sustain the culture and strengths of the company, and position it to grow and diversify into more higher education and healthcare work, he said.

“I am excited about the future. I am excited to be sitting in this seat and be able to continue Oak Contracting, which has built amazing buildings and a lot of amazing relationships in the Baltimore area,” he said “We don’t just want the status quo. We want to grow our general contracting and continue the legacy of Oak Contracting into the next generation.”