For most family-owned businesses, retirement planning isn't complicated; the business is the pension plan. But when a competitor offers to buy you out, the issue of what to do with the rest of your life arises unexpectedly

That's exactly what happened to Robert Taylor when Scott Brookfield came calling last year. Taylor was the owner of Taylor Flooring Ltd., which has stores in Halifax, Dartmouth, Bridgewater, and Sydney, N.S. In early 2009, Brookfield of Halifax-based Blackline Management made the offer.

For Brookfield, 53, a management consultant turned entrepreneur, the deal's merits were obvious. In 2007 he had bought Wacky's Flooring Warehouse with locations in Bedford, Burnside, and Enfield, N.S.; Moncton and Saint John, N.B.; and Charlottetown. Adding Taylor Flooring would give him Canada's largest privately owned flooring company.

For Taylor, the benefits weren't so obvious. He had to consider not only his own future but also those of the members of his family who worked for Taylor Flooring. Fortunately, in Brookfield he found someone with a background in helping people through life-changing moments; a buyer willing to sculpt a deal to fit the seller's personal requirements.

Taylor and Brookfield offered valuable insights into the process of making career-defining decisions during interviews with Progress. But first, the back story.

Robert Taylor is a plumber's son who entered the flooring business at age 20 after graduating from Riverview High School in Sydney River. After a decade spent mostly on the road representing flooring distributors, he saw an opportunity to fill a void when, in 1992, one Halifax flooring retailer went bankrupt and another abandoned the business. Based on his experience with retailers, Taylor believed he could make a difference. "The big-box stores were declining in popularity," he says. "We came in with a boutique approach—nice showrooms, good samples, pleasant service—and we were busy from the get-go."

Some of Taylor's friends thought he was crazy to give up a good-paying job to start a store when others were failing, but he persevered. His focus was high-quality work with competitive pricing. Over 17 years his business grew from one store to four, with 47 full-time staff and more than 50 subcontractors. The staff worked so hard on customer service that 50% of the business now comes from referrals. Like any good Cape Bretoner, family comes first; Taylor hired his son and nephew. And after receiving Brookfield's offer to sell, he consulted his wife, which he does frequently on business matters.

Scott Brookfield is a second-generation chartered accountant who was born in Montreal but raised in Kentville and Halifax; he received a commerce degree from Dalhousie University. Brookfield was the fourth generation of his family to chair the board of the Halifax Assistance Fund, a charity that distributes milk and cookies to schools.

Brookfield cut his teeth during a 22-year career for what was then Touche, Ross (now Deloitte & Touche). After 10 years as a partner telling other people how to run their businesses, he wanted the emotional rush of "risking everything every day." With the caution you would expect of an accountant, he first spent three years as president of Armco, where he had the opportunity to learn under acquisitions mastermind George Armoyan. When Armoyan asked Brookfield to accompany him to Toronto to continue his westward expansion, Brookfield declined, choosing instead to stay in Halifax and launch Blackline Management Group Ltd. to provide management services and operate as a venture capital company. Brookfield asked Derrick Dempster, a chartered accountant who had worked for him at both Deloitte and Armco, to join him as a partner in Blackline.

Brookfield decided to concentrate on bricks-and-mortar. Like Warren Buffet, he had no interest in IT, so he started custom-house-builder Grande Coastal Homes Ltd. Like Taylor, he involved his family; his wife, Cathie, runs the interior decorating and marketing side, while his brother John is president of Grande Coastal.

If there is a common thread among Brookfield's acquisitions, it's that he deals with business families in transition. On the capital side, for example, he works with R.B. Cameron Jr., son of the hall-of-fame capitalist, who is making his own quiet mark in self-storage and apartment acquisitions. Cameron was a partner in Blackline's investment in A. W. Leil, a major crane-rental company in Nova Scotia whose owner, Alison Leil, 76, wanted to concentrate on running cranes instead of spreadsheets (the company also operates as Sagadore Cranes). This transaction helped Brookfield establish a pattern of retaining, whenever possible, the senior management of acquired companies. When he bought Wacky's Flooring, both original owners Mike Wheatley and his business partner Larry Gumbley retired from the flooring business, but general manager Larry Woodland stayed on (he's now a partner in the new company).

As an experienced change agent, Brookfield has looked down his own road and says he's still in the acquisition phase of his career. He plans to hold everything for the medium to long term. Still enjoying working, he says he may continue until he's 70. By retaining senior people in acquired companies and ensuring that they train their replacements, Brookfield expects to withdraw gradually from day-to-day operations. And as his four children, aged 20 to 27, become increasingly independent, Brookfield plans to spend more time travelling with Cathie.

How the dating game works

What do you look for when you want to buy a business?
Scott Brookfield: One that has a good reputation with its customers, an owner who is credible, and a good team. I don't like businesses built around a single individual.

What do you look for when you want to sell a business?
Robert Taylor: You've got to get to know the purchaser, especially to see if they have a feeling for the business. You have to make sure the deal feels right in your gut, never mind what kind of advice you're getting. If it hadn't been Scott Brookfield, I wouldn't have done the deal.

How did you come to an agreement?
SB: After Blackline bought Wacky's Flooring, I called Robert and arranged to meet with him. I needed to share my vision of the two businesses and how great they would be together, with increased market share and purchasing power. As we talked over time, I looked at the deal from his point of view. He would have guaranteed income for retirement because he would receive two-thirds of the value in cash and retain one-third of the shares in both Wacky's and Taylor. At the same time Robert didn't want to retire, and I didn't want him to. He still runs Taylor Flooring, where it's business as usual; in fact, I wouldn't have done the deal without him. I listened to what Robert needed, and we went back and forth until we both felt we had something that was good for each other.

RT: At first I wasn't interested. I was only 48 or 49 and—well, I knew that when I was 50 I should start talking to someone professional about an exit strategy, but I wasn't there yet. Scott called in the spring of 2007 and I said I wasn't interested, but I was proud that somebody wanted to buy my business.

I liked Scott, even though he was my biggest competitor, so I didn't mind when he called again a few months later, as he had promised. Then in January or February of this year we ran into each other again, and I'd been thinking about it by then, so I started telling him about all the great synergies and benefits we could get out of combining. I guess I talked myself into it.

Was it awkward to share information during the negotiations?
SB: I find out more talking to the principals than I do from working with the numbers. I can learn what I have to from the financial statements. Robert didn't have to show me his full customer list, which he didn't want to because I was his biggest competitor. I work on the concept of materiality: Is this information crucial to the deal? You can make people go to a lot of trouble to produce data that, in the end, isn't going to sway your opinion. Trust is so important; it doesn't work if I win and he loses, or if he wins and I lose.

RT: At first my feeling was, "If I give you something, then you have to give something to me." After I talked to my accountant, I became more comfortable with sharing information. The due diligence was so non-invasive, I couldn't believe it. I don't think a stick of inventory was counted.

How do you deal with two brands?
SB: In retail, we're going to leave the two brands separate because they don't overlap. Taylor is No. 1 in the high-end flooring market, while Wacky is strong in economical flooring. Combined, the two companies will benefit from being able to use the best practices of both sides. For instance, they'll have more installers and we'll be able to keep them busy all the time.

RT: We'll be able to do bulk buying on a scale we couldn't do before. On certain lines, we'll be able to order at least double our previous quantities, which means not only better pricing but also being able to deal directly with manufacturers instead of going through distributors.

What has been the effect on employees?
SB: We explained to people how it would be positive for them. This wasn't a typical merger because both companies were well run and both were fairly lean. What we created is Canada's largest privately owned flooring company [2008 sales were $35 million] and an opportunity to grow by combining our purchasing power. I told Robert to tell his staff there would be no job cuts. We need them all.

RT: Most of the faces were pretty blank when I told them at 7:30 a.m. on Sept. 22. Of course, they didn't have much to react to. I told them that nothing was going to change, except there would be new controlling shareholders. A few people spoke to me privately afterward because they were worried about losing their jobs, and I was able to reassure them.

When should the lawyers and accountants get involved?
SB: I told Robert it was important that he and I work out the mechanics of the offer of purchase and sale, then for him to get legal advice. If you involve them too early, it costs three or four times as much.

RT: The first person I called after getting that first call from Scott was my accountant. But then I did a lot of negotiating with Scott from the gut before the lawyers and accountants got really involved.

How does it work for the seller to continue in the business?
SB: I wouldn't have done the deal if Robert hadn't agreed to stay. Although every case is different, I usually want the seller involved for a period of time. Robert has a five-year contract, but personally I hope he's there for 10.

RT: Since I ran the company for 17 years it has been a bit of a challenge having partners, but I'm working on it. Fortunately, Scott and I think alike on a lot of things. The key is to take good advice from each other and to make sure our egos are in check.

How does retirement planning factor into the process?
SB: Usually for a seller, retirement is at least in sight. The sale of the business is the most important way of accumulating capital. That's why it's important to get professional advice. However, a business is only worth what it's worth, and sometimes the number we need in our heads doesn't match the number in our hands. At Blackline, we try to be creative. Often the real estate involved in a business is as valuable as the business itself. So we try to provide options; maybe you'll end up doing a real estate deal with us, but it doesn't really matter. The satisfaction for me is helping people achieve their goals, which may or may not be retirement. For Robert, it was a matter of crafting a deal that fit his lifestyle.

RT: I have no ambition to retire at the moment, but it's nice to know that I can. Right now, I still want to work. I love what I do. I'm still the first guy in here, at 6:00 or 6:30 in the morning. But I like to go back to Cape Breton for a summer vacation. It's nice to know that I could leave for two months and things would still run fine.