Every year, I used to get together with a
client who was a business owner, and every year I would ask him, “Bruce, have
you told your guys that you want them to buy the business?” He had a plan that
he would eventually sell his contracting business to his senior executives, but
he had yet to inform them of this fact.
There is a right way to sell the
business to your own managers or your own family members, and then there is a
wrong way. Since you cannot live long enough to make all of life’s mistakes,
then it is wise to learn from the mistakes of others.
In this spirit, consider a
recent article in The New York Times
titled “The
Wrong Way to Sell a Business.”
Essentially, there are two types
of owners when it comes to the sale or succession of their business. First,
there is the one who knows they will sell the business, but procrastinates all
the way up to the bitter end. This is not the owner/manager to emulate, and the
article showcases a proof-positive example.
While you might think your
managers are ready and willing to buy your business, they may have other ideas.
Regardless, they likely will need time to acquire the capital and then
structure their affairs accordingly. If nothing else, managers are not owners
until they start thinking of themselves as such, and a bit of lead time can
instill such a feeling.
But what about the other type of
owner? Again, the article provides an example of an owner/manager who has a
very decided life-goal in place and can therefore work to instill life-goals in
his managers. Accordingly, if you plan for yourself, and allow your managers to
plan for themselves, then you can train managers who can transition into
becoming owners.
When the succession planning is
successful, the transition is almost nothing more than economics. True,
sometimes these transitions just do not work out, but it is rarely out of an
abundance of planning or understanding. Instead, more than a few deals fall
apart simply because they are all too sudden and unplanned.
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Reference: The New York Time
(August 29, 2013) “The
Wrong Way to Sell a Business”