The word “buyout” rings with a level of frantic implications, but the truth is, when conducted between the right people and with the right approach, it can be a deliberate, almost leisurely, experience.
Scott Helvie’s longtime connection to Bicycle Garage Indy and his passion for the industry and the unique environment of BGI made him the perfect candidate for buying out Founder and CEO Randy Clark. But rather than rush Helvie’s ascension and Clark’s retirement, the two agreed to a gradual buyout that made the transition nearly seamless, offering a host of advantages for both owners and BGI.
1. Tell us a bit about your interest/involvement with Bicycle Garage Indy over the years.
I bought my first new bicycle from Bicycle Garage Indy in 1997 while I was a in College at Purdue University. It was a Schwinn Homegrown, boy I wish I still had that bike. I spent way too much for a college kid but it’s probably what got me hooked. Before graduating I knew I wanted to work in the bike industry but was having trouble getting anything more than a ‘Thanks, but no thanks.’ I interviewed with Randy at Bicycle Garage and he offered me a job and what turned out to be a huge opportunity to learn about the bike industry. I worked for Bicycle Garage Indy until the fall of 2004. Upon leaving, I became the territory rep for Giant Bicycle with Bicycle Garage as one of my accounts. I progressed into a Regional Manger roll but continued to have the stores in my territory. I lived in the Indianapolis market the entire time, so I remained close to Randy and many of the key employee’s over the years. In 2013, Randy and I executed out buyout agreement, putting in place a plan for him to transition out of the business and me to take over day-to-day operations and buy him out.
2. What inspired you to invest in BGI? What was the impetus for beginning that process?
For many years I had worked to grow cycling on a regional level with Giant, and I wasn’t connected to the local cycling scene. Sure, I rode my bike, but I didn’t really have any idea what was happening from an advocacy effort or what we were doing in Indianapolis Metro area to make bike riding better. It was truly a hard decision to leave Giant and take a risk on a new career path. The more Randy and I spoke, the more I realized that my interest in the local market and what was happening at retail was important to me and the future of cycling in the metro area. The opportunity to take a chance on myself and work to grow the business was a big draw for me.
3. Could you tell us a bit about what your succession plan looks like? Why did you choose this type of succession plan (a gradual buyout) as opposed to something else (buying outright, etc.)?
Randy and I have agreed to keep the terms of our agreement confidential, but the general buyout is really pretty simple. I put some of my own money into the business to buy shares. I take over operational control of the business and work hard to grow sales and reduce expenses, allowing us to take those additional profits and use them to buy Randy out of the the business. We both have out clauses, and that keep us honest and working hard. This type of gradual buyout has helped me learn from Randy and keep me focused on what we need to do to drive great customer service, to grow the business and keep expenses in check. It’s reduced the initial workload that can overwhelm a new owner so we can achieve what we both want. It’s also kept me from being burdened under a mountain of debt.
4. What surprises/hiccups did you run into along the way as you transition ownership?
We haven’t run into too many hiccups. I thought I would have a bigger impact than I did in year one; it was humbling and it taught me to look at the long game and plan for the future. Toby, who is our GM of retail, often reminds me that’s its a long year and things can and will change. He is right, and I don’t think I will ever settle for not being able to impact what is happening at the moment.
We have over 50 full time employees. I underestimated all the moving pieces that creates, especially with health insurance. I love working with our staff, customers, vendors, but man, I underestimated the burden of health insurance and trying to provide great coverage for our people and an affordable rate that is heavily subsidized. Insurance, let’s move on…
5. Why are succession plans important, and what would you recommend to someone considering implementing a succession plan?
Succession plans work for someone who has been successful and wants to see their business continue to evolve and grow. Randy I am sure could have taken other offers to sell that would have paid him out a lot sooner but didn’t guarantee that Bicycle Garage Indy and it’s great employee base would be around to grow and progress. It has to be the right fit, and both parties have to have reasonable expectations on how the business will move forward and how quickly that will happen. Randy invested time, resources and opportunities for me to learn about the industry as a young man in my early 20’s, which helped him believe in me now. I’m happy he did, and I think he is happy he did as well.