Caroline Vergauwen, CEO of RG Tegel, doesn’t believe in the classic story that a family business should automatically pass from father to son or daughter. More important than the blood ties are continuity and further growth, with respect for the loyalty of the people who work there. She managed her succession in an atypical way and involved three of her closest employees in a management buyout. BDO listened to her personal story and translated the wishes of the key players into a sales scenario in which the culture and DNA of the family business play the leading role.
The name says it all: RG Tegel is the second largest distributor of ceramic tiles in Belgium. Before Caroline stepped into the family business in 2014 and bought it from her father, she was running a successful television production house. The sale of this production house still haunts her mind. "The new owners removed all intellectual property from the company in a short time and after five years they pulled the plug on it. The name was gone and all the employees no longer had a job." That wouldn't happen a second time when she bought her father's company in 2014. "I wanted the DNA to stay, the company to stay and the whole philosophy and vision to continue."
Since 2014, the tile company's sales and number of employees have doubled. She set out to find a succession story: after all, her two daughters would not be entering the business. She found the perfect, somewhat atypical scenario within her company itself. In January 2021, together with three internal employees, she set up a company to buy the group. Entering the fourth generation while respecting the original DNA was a goal in itself for her. This is the only way the company can grow and continue to exude confidence in the sector.
People and numbers
Caroline always follows her gut feeling. "I was 45 years old when I joined the company and at the same time I felt very well that the family story would come to an end with me. The future of the company is crucial and it is important to have the right man or woman in the right place. And that doesn't necessarily have to be the son or daughter." Caroline ultimately chose the formula of a management buyout (MBO), which she carried out together with Karen Keuleers, head of the legal department at BDO Belgium. Three employees who have been proving their knowledge and ability for years at RG Tegel are going to help write the future story. The anchoring of key employees in the ownership structure of the family business must guarantee continuity, while at the same time maintaining the soul of the company.
Caroline has known Karen since their studies at the KUL in the 1980s and was looking for "a confidant who would continuously look for the common interests in this joint project: an achievable valuation - without necessarily going for the bottom line - and linked funding and (market) compliant fees. Besides, I have already worked with two other consultants in the past who did not consider people to be their first priority".
Tailor-made and to everyone’s abilities
The three employees (Nick D'Joos, Jonathan Daniëls and Katleen Lemmens) hesitated when Caroline asked them to step into RG Tegel's shares on an equal basis - 25% each. But the 'step by step' approach reassured them. "That was one of the great advantages of Karen and her team who built up and explained each step systematically, clearly and very accurately. BDO communicates in a tailored way and to the ability of all parties involved. Technical and theoretical where requested, in common language when their experts sense that they are in danger of losing a party in a conversation."
Not an easy conversation by the way, as none of the three employees had the capital to get a personal loan. To make the operation financially manageable, half of the sale price was paid via an unsecured loan from the bank. "That confidence from the bank is testament to our strong story, supported and underpinned by the reputation and weight of BDO." The other half of the sale price was deferred, based on a "vendor loan" granted by Caroline.
Professionalism, flexibility and style
Decisive for the success of the story and the trust between all players, are the professionalism, the flexibility and the style of the consultant. "After all, you are still working with people," Caroline emphasizes. "BDO was a real sparring partner, quick to react, with short, clear communication and constant accessibility. From the start of the sales process to the final proposal and signing. At every stage, all the people who played a role in the story were involved. This transparent communication without hidden agendas is vital for trust. Even after the signing of the MBO. After all, you should know that thanks to the MBO, I will be able to say goodbye to the company within a few years in a calm manner and without any worries."
In that way, is an MBO also ultimately an interesting way to look at succession? "I think so. Not for everyone, of course. There are certainly situations where during the sale only the amount is important and where the sellers can easily let go." But that's not how Caroline is. "Just because of their human and pragmatic approach, RG Tegel now also consults BDO's experts for legal advice in numerous other areas of our business. And my family has recently started working with BDO for the strategic design and practical implementation of succession plans. In short, there’s a match!"
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