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5 Reasons Buyers Want Your Key People And Not You – Succession Planning

buyers_wanting_employeesYou’re about to sell your business.  You’ve had several conversations with buyers and they all have told you that you’re really important in making the sale work.  You might have even convinced yourself that without you there is no way anyone would want to buy your company.
If that’s true, you’re in big trouble.  It’s more likely the buyer is telling you this so you have good feelings about them.  They probably are way more interested in your key people than they are in you.

You’re probably a lousy employee.

If you’ve run your company for twenty years or more you’re not used to taking orders from a boss.  When the new owners tells you what to do you’re going to balk at orders being given to you.  You might even just plainly do what you want and ignore the requests from the new owner.

If your buyer has bought several businesses, they know the drill.  They’ll try to work with you for a period of time.  After that they’ll just pay you for the rest of your employment contract and be glad that you’re not around anymore.

Your key people know how to take orders.

On the other hand, your key people have been working for you for years.  They’re used to having you tell them what to do.  A new boss will either do it more nicely or not.  That’s not the point.  Your managers are used to being told what to do.

Most likely your managers will be more compliant when it comes to requests from the new owner.  They might not even ask why which is what you’re likely to do.  It just makes it easier for a new owner to integrate your company into their operations.

If you’ve done your job well, you are out of day to day operations.

A business that’s highly saleable will be one that doesn’t depend on you for day-to-day operations.  I’m hoping that you’ve done a good job of making yourself into a passive owner.  If you have, then you’ve become irrelevant to the operations of your company.  This makes your company more valuable and makes you less important in the eyes of a new owner.  Both of these are good things.

Change will come more easily for your employees.

Many business owners I know are more than a little stubborn.  This is what has made you successful.  When someone asks you to change what you’re doing, you often push back.  Change for change's sake just doesn’t make any sense to you.

On the other hand, you’ve asked your employees to change how they do things many times.  It’s not an unusual event and if they don’t believe in the change, they’re likely to do it.  The boss told them and that’s the way it is.

Your managers will run the new companies systems.

When your company has a new owner they will almost surely have new systems.  Someone is going to have to change your old systems over to the new systems.  An experienced buyer will know you’re not the one for this job.  They know your managers are.

I hope you’ve gotten the idea that becoming a passive owner is important to build enterprise value.  An effect of this is you know less about internal operations than you used to know.  If you let the new owner off easy and gracefully exit your business you’ll do both of you a real service.  Most of the time they want to get on with running your company.  Hopefully you’ll have come up with a second act in your life that you’ll be happy with.

Let the new owner have your company.  You do something else.  You’ll both be much happier.

We’ve put together a case study on how to become a passive owner.  It’s a step you’re going to want to take as you move towards a succession strategy in your business.  I think being a passive owner is one of the two things a business needs for a successful sale, or at least in Vermont it does.

Passive Ownership Case Study

 

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Topics: business exit planning, succession planning, new managers


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