What Potential Buyers Look for in a Management Team

What Potential Buyers Look for in a Management Team

A couple of weeks ago, CEO Exclusive Radio had me as a guest, and I was asked, among other things, about what buyers look for in a management team. So, if you’re a CEO/Owner getting ready to sell your business, here are four key points.

1. Make sure that your team knows your business strategy and everything about it. Strategies cannot live in the CEO’s mind, where, unfortunately, many reside in smaller companies. Your team needs to all speak to it as “one” and understand how to execute it. Provide a clear strategy everyone can understand. It will be better than an overreaching complex set of impossible goals.

2. Is your team “navy seal” trained to cover any gaps if you’re not around? If the team has been taking direction a majority of the time, how will they be of value to a new owner? Buyers are willing to take “economic” risk but not “operational” risk and thus are looking at a team that can deal effectively with adversity. Make sure everyone on the team can explain their critical role, as well as those of others on the management team to any potential buyer. They should be comfortable with the buyer’s discovery team discussing how your business is growing and how it’s profitable.

3. The company mission must be a goal your management team understands. Communicate to all regardless of their role and ensure they know their responsibility for the bottom line so they can make it happen at every turn, whether you are there or not. If they are salesmen, do they only know how to sell? Be aware that a killer sales team may not hold the same value to a potential buyer. A new owner will need a business with a complete and diverse management team that runs like a well-oiled machine. Having to replace the management team reduces the value to the buyer.

4. Inform your team early in the decision process, so they have a reason to stay through the merger or sale. Give them a reason to stay. Clean out any staff that doesn’t meld with the idea of a transaction and how they can contribute to the growth and profit possibilities. Every team member must be on board and be able to act as a spokesperson for the company in a positive way. New owners want to come into an environment where HR doesn’t have to solve problems from the get-go.

Listen to a quick clip: Soundcloud

Listen to the whole show: Wholeshow

If you would like a copy of my Due Diligence List, please contact me at marc@marcborrelli.com.

 

© 2015 Marc Borrelli All Rights Reserved

Recent Posts

5 Strategic Leadership Skills Every Manager Needs

5 Strategic Leadership Skills Every Manager Needs

So often, people view leadership as a talent: you’re either born with this quality or you’re not. However, this is not always the case! In reality, good leadership is made up of skills, and anyone can learn how to improve. Some people may pick up leadership attributes...

5 Ways to Use Email Automation to Boost Traffic

5 Ways to Use Email Automation to Boost Traffic

Every single business in the world wants to evolve and grow. This will happen using a variety of techniques and strategies. In 2022, digital marketing is more than a household name, and most companies will adopt at least a few ideas when long-term planning and coming...

Profit and Revenue are Lousy Core Values

Profit and Revenue are Lousy Core Values

As I mentioned last week, I am down with COVID and tired, so spending more time reading rather than working. I read Bill Browder's Freezing Order this weekend, and I highly recommend it. However, at the end of the book, Browder says that oligarchs, autocrats, and...

If You Are Going to Sell Your Business, Sell Now

If You Are Going to Sell Your Business, Sell Now

If you are going to sell your business, sell now.  At the ACG Capital Connection in Atlanta two weeks ago, the common theme from the Private Equity Groups I spoke to was that multiples are back at 2007 levels. They were lamenting the fact that they didn’t have more portfolio companies ready to sell.

Jeff Mortimer, Director of Investment Strategy at BNY Mellon, further reinforced this notion during a presentation I attended today. Jeff said that any private company owner who is looking to exit should sell now. In Jeff’s opinion, the bull market has maybe up to 24 months to run; however, multiples will fall before the end of the market as buyers see the impending downturn and won’t pay for the growth that has passed. Thus in his view, the selling business window could close anytime in the next 6 – 18 months, and if an owner were to miss it, it would be another 8 to 10 years before multiples were to return to this level.

To paraphrase Oscar Wilde, “To ignore one sign, Mr. Worthing, may be regarded as a misfortune; to ignore both looks like carelessness.”

 

© 2015 Marc Borrelli All Rights Reserved

Recent Posts

5 Strategic Leadership Skills Every Manager Needs

5 Strategic Leadership Skills Every Manager Needs

So often, people view leadership as a talent: you’re either born with this quality or you’re not. However, this is not always the case! In reality, good leadership is made up of skills, and anyone can learn how to improve. Some people may pick up leadership attributes...

5 Ways to Use Email Automation to Boost Traffic

5 Ways to Use Email Automation to Boost Traffic

Every single business in the world wants to evolve and grow. This will happen using a variety of techniques and strategies. In 2022, digital marketing is more than a household name, and most companies will adopt at least a few ideas when long-term planning and coming...

Profit and Revenue are Lousy Core Values

Profit and Revenue are Lousy Core Values

As I mentioned last week, I am down with COVID and tired, so spending more time reading rather than working. I read Bill Browder's Freezing Order this weekend, and I highly recommend it. However, at the end of the book, Browder says that oligarchs, autocrats, and...