Last year, Mike Mouron, president and founder of the Birmingham, Ala.,-based student housing provider Capstone, knew he needed to begin thinking of what his company would look like once he retired.
After kicking around the idea of splitting up the company and selling it, or selling it outright, he decided to break the firm up into four autonomous companies and let the people currently running those divisions take over. “The business was too diverse and the experience of the people was not as broad as it needed to be [to have one person take over]," he says. "Since the people were specialized, no one was in position to take over.”
The four division include University Affiliated Development, led by Bruce McKee and Jeff Jones; Non-University Affiliated Development, piloted by John Vawter, Rob Howland, and Ben Walker; Acquisition and Renovation led by Christopher Mouron, Drew Mouron, and Anderson Neighbors; and On-Campus Management, led by Doug Brown, Will Davenport, Alton Irwin, and Sandy Hill.
“In effect, I’m trying to set up the business with the people who are running the divisions in one form or fashion and giving them much greater responsibility and financial opportunity,” Mouron says.
Those division heads are earning more, but will also have more of the financial exposure. “I wasn’t willing to continue to sign notes and guarantees as broadly as I had in the past if I was not involved in all of the day-to-day activities,” Mouron says. “Given my desire to back out of the day-to-day operations, I also wanted to begin to limit my financial exposure.”
Mouron has three sons in the business, but he didn’t think they had the experience to take over the entire operation. “I wouldn’t expect people twice the age of my sons who have a lot more experience than them to be subjected to their opinions and direction,” he says.
So far, Mouron reports that everything is working out as expected. “All of the companies are doing very well,” he says. “All of the people seem unusually highly motivated. which probably comes with greater autonomy, authority, and opportunity.”